2022 (7) TMI 565 - HC - GST

Levy of GST - Royalty - challenge to notifications whereby, royalty paid by them on mining activity is being subjected to GST and/or notices issued for alleged incriminating discrepancies in returns after scrutiny and analogous proceedings - HELD THAT - Reserving the right of the respondents to move for vacation of ad interim stay, if so advised, it is hereby directed that in the proposed recovery of GST on royalty shall remain stayed qua all the writ petitioners. However, the respondents shall be at liberty to continue with the proceedings which have been initiated under the impugned notices. In fresh matters, notices shall be issued to the respondents. In such writ petitions wherein notices have been issued, the Registry shall check for service upon the respondents and where powers have been filed, names of the respective counsels shall be reflected. List on 16.08.2022.

Summary

Issues:
Permissibility of raising demand of GST on royalty.

Analysis:
The High Court of Rajasthan addressed a bunch of writ petitions challenging the notifications imposing GST on royalty paid for mining activities and alleging discrepancies in returns. The Court referred to a previous case, M/s Shivalik Silica Vs. Union of India & Ors., where a Division Bench had ruled against the assessee regarding service tax on royalty. The Court noted that the issue is also under consideration by a larger Bench of the Supreme Court. Despite the rejection of relief in the Shivalik Silica case, the High Court held that the effect of the previous judgment in the Udaipur Chambers of Commerce & Industry case remains in abeyance due to a pending challenge in the Supreme Court. Consequently, the Court decided to stay the recovery of GST on royalty for all petitioners, allowing the proceedings initiated under the notices to continue. The respondents were granted the option to seek vacation of the stay, and fresh notices were to be issued in new matters, with replies to be filed by the next hearing date.

In conclusion, the High Court granted interim relief by staying the recovery of GST on royalty for the petitioners, considering the pending challenge in the Supreme Court and the fact that replies were still awaited in the writ petitions. The Court emphasized the need to balance the interests of both parties and allowed the proceedings under the notices to proceed while maintaining the stay on the recovery of GST. The case was listed for further hearing on a specified date, and the respondents were directed to file replies through their respective counsels in a timely manner.