2024 (2) TMI 427 - HC - GST

Levy of GST - royalty - consideration either for sale of goods or service provided or not - whether the royalty payment is tax and not consideration in the context of the privilege parted by the State allowing the petitioner and others to mine sand? - HELD THAT - 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, nature of royalty payment was considered and it was opined to be in the nature of tax. List after two months - Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed.

Summary

Issues involved:
The judgment addresses the issue of whether royalty payment for mining sand is subject to Goods and Services Tax (GST) or if it should be considered as tax instead of consideration for the privilege granted by the State.

Royalty Payment as Tax:
The petitioner argued that the royalty payment should be classified as tax and not consideration for the privilege of mining sand. Citing a Supreme Court decision in India Cement Ltd. and Others vs. State of Tamil Nadu, it was contended that royalty payment is akin to tax. The petitioner also highlighted a similar ongoing matter in the Supreme Court, M/s Lakhwinder Singh vs. Union of India & Ors., where the payment of GST for grant of mining lease/royalty was stayed. The High Court directed the office to update the petitioner's details accordingly and listed the case for further hearing in two months.

Conclusion:
The High Court granted the petitioner leave to amend the parties involved and correct the details in the records. The court considered the argument that royalty payment for mining sand should be treated as tax rather than consideration for GST purposes, drawing parallels to relevant legal precedents and an ongoing Supreme Court case. The payment of GST for grant of mining lease/royalty was ordered to remain stayed until further notice.