2022 (3) TMI 1048 - HC - GST

Levy of GST - mining activity w.e.f. 01.07.2017 as contained in item H6 of the Press Release issued pursuant to the 45th meeting of the GST Council on 17.09.2021 - Section 74(1) of the GST Act - HELD THAT - Since in similar matters, interim orders have been passed by this Court in the light of interim orders passed by Hon'ble Supreme Court, therefore, the petitioner is also entitled for interim relief. As an interim measure, it is provided that until further orders of this Court, the demand notices dated 07.01.2022 and 18.01.2022 for the months July 2017 to March 2018 under Section 74(1) of the CGST/UPGST Act, shall remain stayed - Learned counsel for the respondents pray for and are granted three weeks' time to file counter affidavit. Petitioner shall have a week thereafter to file rejoinder affidavit.

Summary

Issues:
1. Clarification on levy of GST on mining activity
2. Proceedings initiated under Section 74(1) of the GST Act
3. Chargeability of GST and Service Tax on royalty payable for mining of minerals

Analysis:

Issue 1: Clarification on levy of GST on mining activity
The petitioner sought a writ to quash the clarification regarding the levy of GST on mining activity from July 1, 2017, as per a Press Release issued after the 45th meeting of the GST Council. The High Court considered interim orders passed in similar cases by the Supreme Court and a coordinate Bench, granting relief to petitioners regarding the payment of GST for mining lease/royalty. The Court found merit in the petitioner's case and stayed the demand notices issued under Section 74(1) of the CGST/UPGST Act until further orders.

Issue 2: Proceedings initiated under Section 74(1) of the GST Act
The petitioner also sought to quash proceedings initiated by notices dated January 7, 2022, and January 18, 2022, under Section 74(1) of the GST Act. The Court, considering similar interim orders passed in related cases, granted relief to the petitioner by staying these demand notices until further orders. The respondents were given three weeks to file a counter affidavit, and the case was to be listed after four weeks along with similar writ petitions.

Issue 3: Chargeability of GST and Service Tax on royalty for mining of minerals
The Court referred to previous orders of the Supreme Court regarding the chargeability of GST and Service Tax on the amount of royalty payable for mining of minerals. The petitioner relied on Supreme Court decisions and ongoing cases to support their argument that royalty payment is in the nature of tax and not consideration for goods or services, hence not liable for GST. The Court acknowledged the pending larger Bench reference by the Supreme Court on the nature of royalty. Considering the legal precedents and interim orders, the Court granted interim relief to the petitioner, staying the demand notices related to service tax until further orders.

In conclusion, the High Court granted interim relief to the petitioner in quashing the clarification on GST levy on mining activity and staying the demand notices issued under the GST Act. The Court's decision was influenced by previous Supreme Court orders and ongoing legal disputes regarding the chargeability of GST and Service Tax on royalty for mining activities. The respondents were directed to file a counter affidavit, and the case was scheduled for further proceedings in conjunction with similar writ petitions.