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2023 (9) TMI 959 - HC - GSTLevy of GST and Service Tax - royalty payable to the Government on mining of minerals - HELD THAT - An interim order dated 15.11.2021 has been passed by a coordinate Bench of this Court in M/S A.D. AGRO FOODS PRIVATE LIMITED VERSUS UNION OF INDIA 2021 (12) TMI 656 - ALLAHABAD HIGH COURT as has been placed, where Reliance has been placed on a Constitution Bench decision of the Supreme Court in INDIA CEMENT LIMITED VERSUS STATE OF TAMIL NADU 1989 (10) TMI 53 - SUPREME COURT , wherein it was held that, nature of royalty payment was considered and it was opined to be in the nature of tax. In view of the referred interim orders passed by Hon'ble Supreme Court and an interim order passed by a coordinate Bench of this Court , it is found that the petitioner has made out a case for interim relief. List after expiry of four weeks before the appropriate Bench along with M/s. A.D. Agro Foods Private Limited and other similar writ petitions.
Issues:
The judgment involves the issue of whether GST and Service Tax are chargeable on the amount of royalty payable to the Government on mining of minerals. Comprehensive Details: The petitioner filed a writ petition seeking to quash the demand-cum-show cause notice issued by Respondent No.3 for service tax under the Finance Act, 1994. The primary question before the court was the applicability of GST and Service Tax on royalty payments for mining activities. The petitioner's counsel referred to various orders of the Hon'ble Supreme Court related to similar issues. Notably, an order dated 11.01.2018 in a specific case granted a stay on the payment of service tax for grant of mining lease/royalty. Similarly, orders dated 18.08.2020 and 04.10.2021 also granted stays on the payment of service tax for mining activities. Furthermore, the counsel highlighted that the nature of royalty payments had been referred to a larger Bench by the Supreme Court in a previous case, indicating that the matter was still pending consideration. In support of the petitioner's case, reference was made to a Constitution Bench decision of the Supreme Court which considered royalty payments to be in the nature of tax. The counsel argued that the payment made by the petitioner was not amenable to GST as it did not constitute consideration for the sale of goods or services provided. Considering the interim orders passed by the Supreme Court and a coordinate Bench of the High Court, the court found merit in the petitioner's case for interim relief. Consequently, the court ordered a stay on the impugned demand-cum-show cause notice issued by Respondent No.3 regarding service tax until further orders. The court directed the respondents to file a counter affidavit within three weeks, allowing the petitioner a week to file a rejoinder affidavit. The case was listed for further proceedings after four weeks before the appropriate Bench, along with similar writ petitions. In conclusion, the court granted interim relief to the petitioner, staying the demand-cum-show cause notice related to service tax, based on the legal arguments and precedents presented during the proceedings.
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