Ladoiya Bricks Company vs. Union Of INDIA

Held

The Court held that the right of the petitioners to file replies to show cause notices or to file appeals against final assessment orders is a statutory remedy available under the GST Act, which they are free to pursue 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 GST demand 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 continue pursuing this relief, while denying relief against the imposition of GST on royalty. Consequently, these ten writ petitions were deferred for consideration of the DMFT issue, and the remaining batch of writ petitions was dismissed.

Facts

A batch of writ petitions was filed challenging show cause notices and assessment orders issued by the respondent GST Department. These notices raised demands for GST on royalty paid by the petitioners to the Mining Department for their respective mining leases. In ten of these petitions, an additional issue concerning the demand of royalty on contribution 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 was different from the current GST issue. They claimed this prejudiced their right to argue on merits.

Key Issues

1. Whether the show cause notices/assessment orders demanding GST on royalty paid for mining leases are valid, considering the petitioners' contention that a previous Division Bench judgment in Sudershan Lal Gupta (supra) did not adjudicate on merits and relied on dissimilar cases regarding service tax on royalty, thus prejudicing their right to agitate the current GST issue on merits? Petitioner's argument: The petitioners argued that the Division Bench in Sudershan Lal Gupta (supra) dismissed petitions without a merits-based adjudication, relying on earlier cases dealing with service tax on royalty, which is distinct from the present GST controversy. They asserted that this dismissal frustrated their right to argue the GST demand on its merits. Respondent's argument: The respondents contended that a Coordinate Bench had already dismissed identical challenges to GST demands on royalty in its judgment dated 27.09.2022 in Sudershan Lal Gupta (supra), and therefore, these writ petitions should also be rejected.