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HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR
Vijay Bishnoi, Madan Gopal Vyas, JJ.
Shree Basant Bhandar Int Udyog – Appellant
Versus
Union Of India & Ors. – Respondents
D.B. Civil Writ Petition No. 5678 of 2022
Decided On : 21-04-2022
Royalty - Taxation - Summary: The court discussed the distinction between royalty and land revenue, citing the decision in India Cement Ltd. Etc. Vs. State of Tamil Nadu Etc. The court also noted the stay on payment of service tax for grant of mining lease/royalty in a related case. The court restrained the recovery of GST on royalty paid for excavation of sand for brick, pending further proceedings.
Fact of the Case:
The petitioner argued that royalty is separate from land revenue and should not be taxed, citing relevant Supreme Court decisions. The court issued notice and restrained the respondents from recovering GST on royalty paid for excavation of sand for brick.
Finding of the Court:
The court found merit in the petitioner's argument and issued notice while restraining the recovery of GST on royalty pending further proceedings.
Issues: The issue of taxation on royalty and the distinction between royalty and land revenue were central to the case.
Ratio Decidendi: The court relied on the distinction between royalty and land revenue as established in the India Cement Ltd. case and considered the stay on payment of service tax for grant of mining lease/royalty in a related case.
Final Decision: The court issued notice and restrained the recovery of GST on royalty paid for excavation of sand for brick, pending further proceedings.
ORDER
1. Learned counsel for the petitioner has submitted that as per the decision of the Hon'ble Supreme Court rendered in the case of India Cement Ltd. Etc. Vs. State of Tamil Nadu Etc., reported in AIR 1990 SC 85, the royalty is separate and distinct from the land revenue and it is not related to the land as a unit, as such, no tax is to be paid upon the royalty. Learned counsel for the petitioner has further submitted that the Hon'ble Supreme Court in Special Leave to Appeal (C) No.37326/2017, arising out of judgment of this Court rendered in the case of Udaipur Chamber of Commerce and Industry Vs. Union of India has already stayed payment of service tax for grant of mining lease/royalty.
2. Issue notice. Issue notice of stay application also, returnable on 5.7.2022.
3. Meanwhile, the respondents are restrained from recovery of GST on the royalty paid on account of excavation of sand for brick and further proceedings pursuant to the notice dated 15.02.2022 (Annex.5) shall remain stayed.
The distinction between royalty and land revenue and the applicability of taxation on royalty were the central legal principles established in the judgment.
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.
Royalty is a contractual obligation distinct from taxes; amendments to regulations cannot retrospectively apply to existing contracts unless explicitly stated.
Royalty paid on minerals under the Mines and Minerals (Development and Regulation) Act, 1957, does not constitute a tax, and therefore, transactions involving such payments are not exempt from the ap....
The main legal point established in the judgment is that the stamp duty for a mining lease should be calculated based on anticipated royalty, surface rent, and security deposit as per the provisions ....
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