Saharan Ent Udhyog vs. Union Of INDIA

Held

The Court held that the right of the petitioners to file replies and raise objections against show cause notices, or to file appeals against final assessment orders, are statutory remedies available under the GST Act and can be availed irrespective of the outcome of the writ petitions. Regarding the demand of GST on royalty, the Court found that this issue had been concluded by the judgment dated 27.09.2022 in Sudershan Lal Gupta vs UOI & Ors. and connected matters. However, concerning the issue of demand of GST on DMFT contribution, the Court permitted the petitioners in specific writ petitions (Nos. 6368/2022, 6370/2022, 6373/2022, 6513/2022, 7801/2022, 8629/2022, 8671/2022, 10681/2022, 8407/2022, and 8492/2022) to pursue this relief while denying relief against the imposition of GST on royalty. The remaining batch of writ petitions was dismissed in light of the Sudershan Lal Gupta judgment.

Facts

A batch of writ petitions challenged show cause notices and assessment orders issued by the GST Department demanding Goods and Services Tax (GST) on royalty paid by the petitioners to the Mining Department for their mining leases. In ten of these petitions, an additional issue regarding the demand of royalty on contributions to the District Mineral Foundation Trust (DMFT) was also raised. The petitioners argued that a previous Division Bench judgment at the Jaipur Bench, in Sudershan Lal Gupta vs Union of India & Ors., did not adjudicate on the merits and dismissed petitions based on earlier cases concerning service tax on royalty, which they contended is different from the current GST issue. They claimed this prejudiced their right to argue on merits. The respondents argued that a Coordinate Bench had already rejected similar challenges to GST demands on royalty.

Key Issues

1. Whether the petitioners' right to agitate against the show cause notices on merits has been frustrated by the judgment in Sudershan Lal Gupta (supra)? (Question of law) 2. Whether the demand of GST on royalty paid for mining leases is liable to be set aside? (Question of law) 3. Whether the demand of royalty on contribution to DMFT is liable to be set aside? (Question of law) Petitioner's Contention: The petitioners argued that the judgment in Sudershan Lal Gupta (supra) was not on merits and relied on previous cases dealing with service tax on royalty, which is distinct from the current GST issue. They contended that this dismissal prejudiced their right to argue the merits of their case. They relied on the distinction between service tax and GST on royalty payments. Respondent's Contention: The respondents contended that a Coordinate Bench had already dismissed identical challenges to GST demands on royalty in its judgment dated 27.09.2022, and therefore, these writ petitions should also be rejected.