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IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR
MANINDRA MOHAN SHRIVASTAVA, SHUBHA MEHTA, JJ.
Sudershan Lal Gupta & Ors. - Petitioners
Versus
Union of India, Through its Secretary, Department of Revenue, Ministry of Finance & Ors. - Respondents
D. B. Civil Writ Petition Nos. 8109, 5199, 6391, 9534 of 2022
Decided On : 27-09-2022
GST - Imposition of GST on royalty - Central Goods and Services Tax Act, 2017 (CGST Act of 2017)/Rajasthan Goods and Services Tax Act, 2017 (RGST Act of 2017) - Sections 9, 15, 50, 73, 74 - Circular No. 164/20/2021-GST dated 06.10.2021 - Notification No. 13/2017-CT(Rate) dated 28.06.2017 - Notification No. F.12(56)FD/Tax/2017-Pt.-I-51 dated 29.06.2017 - Challenge to leviability of GST on royalty - Final orders passed by Co-ordinate Benches of the Court - Interim orders - Precedent - Mineral Area Development Authority etc. & Others Vs. M/s. Steel Authority of India and Others (2011) 4 SCC 450
Fact of the Case:
The writ petitions challenge the imposition of service tax/goods and service tax (GST) on royalty, and seek to declare certain sections of the CGST Act of 2017/RGST Act of 2017 as unconstitutional. The petitioners also challenge Circulars related to the taxability of mining rights and the applicability of GST on mining royalty/dead rent.
Finding of the Court:
The Court found that the issue of leviability of GST on royalty had been finally decided in previous cases by different Division Benches of the Court, and all the petitions challenging the same were liable to be rejected and dismissed. The Court also noted that interim orders granting relief in some cases did not change the final decisions of the Court.
Issues: The main issue was the challenge to the leviability of GST on royalty, as well as the applicability of GST on mining royalty/dead rent and the contribution to District Mineral Fund Trust (DMFT)/Rajasthan State Mineral Exploration Trust (RSMET).
Ratio Decidendi: The Court held that the final orders passed by Co-ordinate Benches of the Court were binding and constituted precedent, while interim orders did not have the same authoritative effect. The Court also noted that the issue of whether royalty is in the nature of tax had been referred to the Supreme Court for consideration.
Final Decision: The Court dismissed the writ petitions challenging the leviability of GST on royalty, as the issue had been finally decided in previous cases. One petition was allowed to survive adjudication only in respect of other reliefs.
ORDER :
Manindra Mohan Shrivastava, J.
1. All these writ petitions have been filed by the petitioners assailing the legality and validity of imposition of service tax/goods and service tax (for short ‘GST’) on royalty.
In D.B. Civil Writ Petition No. 9534/2022, prayer has been made for declaring Sections 9 and 15 of the Central Goods and Services Tax Act, 2017 (for short ‘the CGST Act of 2017’)/Rajasthan Goods and Services Tax Act, 2017 (for short ‘the RGST Act of 2017’) as unconstitutional levying GST on the reverse charge basis on the royalty of the mining extraction. Prayer has also been made for declaring Sections 50, 73 and 74 of the CGST Act of 2017/RGST Act of 2017 as unconstitutional imposing interest and penalty on non-payment of tax under Sections 9 and 15 of the CGST Act of 2017/RGST Act of 2017. Consequential relief of quashing the show cause notices and declaring all the proceedings as concluded has also been made.
In D.B. Civil Writ Petition No. 8109/2022, Circular No. 164/20/2021-GST dated 06.10.2021 has been challenged insofar as it pre supposes taxability on grant of mining rights under the GST law and to read down Entry No. 5 of Notification No. 13/2017-CT(Rate) dated 28.06.2017 and Entry No. 5 of Notification No. F.12(56)FD/Tax/2017-Pt.-I-51 dated 29.06.2017 to hold that grant of mineral exploration and mining rights are not covered within the scope of supply of services under the GST law. Consequential prayer of quashing notice dated 30.03.2022 for non-deposit of tax has also been sought.
In D.B. Civil Writ Petition No. 5199/2022, the petitioners have prayed for declaration that GST is not leviable on the mining royalty/dead rent. Prayer for quashing Circular No. 164/20/2021-GST dated 06.10.2021 to the extent it relates to applicability of GST on the mining royalty/dead rent has also been made. Petitioners have also prayed for quashing of summons/notices and all proceedings initiated with respect to levy of GST on mining royalty/dead rent. Prayer has also been made for quashing Circular No. 192/02/2016-Service Tax dated 13.04.2016 to the extent it relates to applicability of service tax on mining royalty/dead rent. The petitioner has also prayed for a declaration that GST is not leviable on the contribution to District Mineral Fund Trust (DMFT)/Rajasthan State Mineral Exploration Trust (RSMET) payable to the State Government along with mining royalty and consequential levy of GST on DMFT/RSMET be held as illegal and ultra vires the provisions of the Finance Act, 1994.
In D.B. Civil Writ Petition No. 6391/2022, the petitioner has prayed for quashing Circular No. 16/20/2021-GST insofar as it presupposes taxability on granting mining rights under GST law coupled with prayer for reading down Entry No. 5 of Notification No. 13/2017-Central Tax(Rate) dated 28.06.2017 and Entry No. 5 of Notification No. F.12(56)FD/Tax/2017-Pt.I-51 dated 29.06.2017 and to hold that grant of mineral exploration and mining right is not covered within the scope of supply of services under the GST law. Consequential relief of quashing notice and proceedings has also been made.
Thus, in all the writ petitions, except D.B. Civil Writ Petition No. 5199/2022, the foundation of relief sought is essentially based on the challenge to leviability of GST on royalty.
In D.B. Civil Writ Petition No. 5199/2022, apart from challenge to the legality and validity of imposition of GST on royalty, another relief that GST is not leviable on the contribution to District Mineral Fund Trust(DMFT)/Rajasthan State Mineral Exploration Trust (RSMET) has also been sought.
In the alternative, prayer has also been made to declare that royalty is classifiable under Entry 17(iii) of Notification dated 28.06.2017 as amended and, therefore, in any case, GST on royalty is leviable only @ 5% as applicable on the supply like goods involving transfer of goods.
2. In all the aforesaid writ petitions, learned counsel appearing on behalf of the respondents raised objection to the mai
The court upheld the imposition of GST on royalty paid for mining leases, aligning with prior rulings.
The court upheld the imposition of GST on royalty payments, affirming previous judicial decisions on the matter.
The court upheld the imposition of GST on royalty payments for mining leases, affirming previous judicial decisions.
The court's decision was influenced by previous orders and the interpretation that the issue does not survive for consideration anymore.
The distinction between royalty and land revenue and the applicability of taxation on royalty were the central legal principles established in the judgment.
Royalty is a contractual obligation distinct from taxes; amendments to regulations cannot retrospectively apply to existing contracts unless explicitly stated.
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