2022 (2) TMI 510 - HC - GST

Rate of GST - grant of mining rights - period 01/07/2017 to 31/12/2018 - 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 MINERAL AREA DEVELOPMENT AUTHORITY ETC. VERSUS M/S STEEL AUTHORITY OF INDIA ORS 2011 (3) TMI 1554 - 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.

Summary

Issues:
1. Legality of show cause notice for GST on minerals already subjected to royalty charges.
2. Interpretation of Circular No.164/20/2021-GST regarding tax rate on grant of mining rights.
3. Granting interim protection to the petitioner pending Supreme Court's decision on GST chargeability.

Analysis:
1. The petitioner sought relief against a show cause notice dated 07.12.2017 for GST on minerals where royalty had already been paid. Citing a Supreme Court reference in Mineral Area Development Authority v. Steel Authority of India, the petitioner argued for interim protection, similar to a case where the Supreme Court stayed GST payment for mining lease/royalty in M/s. Lakhwinder Singh v. Union of India. The Court acknowledged the ongoing Supreme Court consideration on GST chargeability and granted interim stay on the show cause notice.

2. The petitioner challenged Circular No.164/20/2021-GST interpreting the tax rate on grant of mining rights as arbitrary and illegal. Noting a similar case where interim stay was granted, the Court considered the petitioner's plea for interim protection. The Court's decision to stay the show cause notice was influenced by the active consideration of GST chargeability on minerals already subjected to royalty payments by a Nine Judges Bench of the Supreme Court.

3. The Assistant Government Pleader for Commercial Tax clarified that only a show cause notice had been issued. Considering the pending Supreme Court cases and the petitioner's case for interim relief, the Court stayed the impugned show cause notice until the disposal of relevant Supreme Court cases. The Court directed completion of pleadings and listed the matter for further proceedings post the Supreme Court's decision in related cases, allowing parties to mention the matter after the Supreme Court's ruling.