9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (2) TMI 488 - HC - GSTLevy of Goods and Service Tax (GST) on Mining Lease / Royalty - Constitutional validity of Entry 17 (viii) of G.O.Ms.No.72 dated 29.06.2017 as amended by para 1 (e) of G.O.Ms.No.170 dated 31.12.2018 - validity of Circular No.164/20/2021-GST, CBIC 190354/207/2021 TO (TRU-II) CEBEC dated 06.10.2021. The primary ground for the levy of Goods and Service Tax on royalty / seigniorage fee is that Royalty is a 'tax' and does not represent 'services'. HELD THAT - Levy of tax on royalty has been the subject of controversy even under the Finance Act, 1994. The authorities levied Service Tax on royalty which was upheld by the Rajasthan High Court. The matters were carried in appeal(s) to the Apex Court and an order of interim stay was granted by the Hon'ble Supreme Court in Udaipur Chamber of Commerce and Industry Vs. Union of India 2018 (8) TMI 287 - SC ORDER vide order dated 11th January, 2018 on a challenge to the judgment of the High Court of Rajasthan. Subsequent thereto, with the introduction of GST, tax was levied on royalty. The same was challenged before the Apex Court. The Hon'ble Supreme Court has granted an interim order with regard to levy of Goods and Service Tax on royalty in Lakhwinder Singh Vs. Union of India Ors. 2021 (11) TMI 336 - SC ORDER . Following directions have been issued (i) In the cases, where the challenge is made to the show cause notices, the writ petitioners shall submit their objections / representations within a period of four weeks from the date of receipt of a copy of this order. (ii) Upon receipt of the objections / representations from the writ petitioners, the authority concerned shall proceed with the adjudication, on merits and in accordance with law, after affording reasonable opportunity of being heard to the petitioners. However, the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the issue as to the nature of royalty. (iii) It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision. (iv) Needless to state that on the matters being decided, the writ petitioners if still aggrieved, shall redress their grievance(s), if any, before the appropriate forum, including by filing appeal(s). (v) Insofar as the challenge to the notification as well as the circular, it is open to the writ petitioners to act upon, after the outcome of the case pending before the Nine Judge Constitution Bench. (vi) It is also made clear that all the contentions are left open for the writ petitioners to raise in appropriate proceedings, after the outcome of the decision of the Nine Judge Constitution Bench. This batch of writ petitions are disposed of.
Issues involved:
The judgment involves challenges related to the vires of G.O.Ms.No.72 dated 29.06.2017, Circular No.164/20/2021-GST, show cause notices proposing Goods and Service Tax on Mining Lease/Royalty, and adjudication orders levying/demanding Goods and Service Tax on Mining Lease/Royalty. Challenging the vires of Entry 17 (viii) of G.O.Ms.No.72: The petitioners were allowed quarrying operations on payment of seigniorage charges for Mining Lease. The issue revolved around the levy of Goods and Service Tax on royalty/seigniorage fee collected by the Government. The challenge was based on the Notification no.11/2017 - Central Tax (Rate) dated 28.06.2017, which referred to licensing services for the right to use minerals, including its exploration and evaluation. The validity of this notification was under scrutiny. Challenge to Circular No.164/20/2021-GST: The Central Board of Indirect Taxes and Customs issued a circular clarifying the tax rate on royalty as 18% even before G.O.Ms.No.72. The circular was challenged for being contrary to the Entry. The Circular referred to the 45th GST Council Meeting and conflicting rulings of the Authority for Advance Ruling, choosing to apply a higher tax rate even for the period before 1st January 2019. Challenge to show cause notices and adjudication orders: The primary ground for levying Goods and Service Tax on royalty/seigniorage fee was disputed, arguing that royalty is a 'tax' and not a representation of 'services'. Divergent views on the nature of royalty were highlighted, with reference to past judgments and a pending case before a Constitution Bench of Nine Judges. The judgment discussed the questions framed by the Constitution Bench regarding the nature of royalty and tax on land under different entries. Judgment: The Court directed the petitioners to submit objections within four weeks in cases challenging show cause notices. Adjudication orders were to be kept in abeyance until the Nine Judge Constitution Bench decides on the nature of royalty. No recovery of GST on royalty was allowed until the Constitution Bench's decision. The petitioners were given the option to act upon the outcome of the pending case. All contentions were left open for the petitioners to raise in appropriate proceedings post the Constitution Bench's decision. The batch of writ petitions was disposed of with no costs, and connected miscellaneous petitions were closed.
|
