2021 (11) TMI 434 - HC - GST

Rate of tax - service by way of grant of mining rights - GST on the same minerals on which royalty - HELD THAT - Since the very issue as to whether GST would be chargeable on minerals on which already royalty has been paid is actively under consideration before a Nine Judges Bench of the Hon ble Supreme Court, in the present matter, the petitioner has made out a case for interim order. The matter be listed after disposal of Writ Petition. In the meantime, there shall be stay of the show cause notice dated 07.10.2021 issued to the petitioner, which is impugned in the present writ petition - pleadings be completed.

Summary

Issues:
1. Challenge to show cause notice for GST on minerals already subject to royalty charges.
2. Interpretation of Circular No.164/20/2021-GST regarding tax rate on mining rights.
3. Request for interim protection similar to other cases pending before the Hon'ble Supreme Court.

Detailed Analysis:
1. The petitioner sought relief from the High Court, challenging a show cause notice dated 07.10.2021 for GST on minerals for the tax periods July 2017 to August 2021. The petitioner argued that the notice was illegal, arbitrary, and contrary to the provisions of the Central Goods and Services Tax Act, 2017 and the Andhra Pradesh Goods and Services Tax Act, 2017. The petitioner highlighted that royalty charges for the extracted minerals had already been paid, questioning the need for additional GST. Reference was made to a conflict between earlier Supreme Court decisions, leading to a matter being referred to a Nine Judges Bench of the Supreme Court. The petitioner requested interim protection similar to a case where the Supreme Court had stayed GST payment for grant of mining lease/royalty.

2. The petitioner also challenged Circular No.164/20/2021-GST, issued by the Central Board of Indirect Taxes and Customs, which interpreted the rate of tax on service related to grant of mining rights for the period 01.07.2017 to 31.12.2018 at 18%. The petitioner argued that this interpretation was arbitrary, irrational, illegal, and void. The petitioner's counsel emphasized the need for the High Court to intervene and declare the circular as such.

3. In consideration of the ongoing deliberation before a Nine Judges Bench of the Supreme Court regarding the chargeability of GST on minerals already subject to royalty, the High Court granted interim relief to the petitioner. The Court acknowledged the relevance of a similar case where interim stay had been granted, suspending the impugned show cause notice. Consequently, the High Court ordered a stay on the show cause notice dated 07.10.2021 issued to the petitioner until the disposal of related cases before the Supreme Court. The parties were permitted to approach the High Court after the Supreme Court's decisions, and the completion of pleadings was directed in the meantime.