2022 (1) TMI 51 - HC - GST

Violation of principles of natural justice - Stay on orders staying payment of GST for grant of mining lease/ royalty - HELD THAT - Since the very issue as to whether GST would be chargeable on minerals on which already royalty has been paid is actively under consideration before a Nine Judges Bench of the Hon'ble Supreme Court, in the present matter, the petitioner has made out a case for interim order. There shall be stay of the show cause notice dated 25.11.2021 issued to the petitioner, which is impugned in the present writ petition.

Summary

Issues involved:
Challenge to the issuance of notice for demand of GST without considering explanations and levy of GST on royalty amount already paid.

Analysis:
The petitioner sought relief through a writ petition, challenging the action of the 1st respondent in issuing a notice for demand of amounts payable under the Central Goods and Services Tax Act, 2017 and the State Goods and Services Tax Act, 2017. The petitioner contended that the notice was issued without considering their explanations and proposed to levy GST on royalty amounts already paid to the government, along with interest and penalty, deeming it arbitrary and in violation of the provisions of the CGST/SGST Act, 2017. The petitioner requested the court to declare the notice null and void.

The petitioner's counsel argued that the petitioner had already paid royalty charges for the minerals extracted but was still issued a show cause notice regarding the charging of GST on the same minerals. Referring to a Supreme Court case where conflicting decisions led to a reference to a Nine Judges Bench, the counsel emphasized the need for interim protection for the petitioner, citing a similar case where interim stay had been granted suspending the show cause notice. The counsel highlighted that the Hon'ble Supreme Court had passed interim orders staying the payment of GST for grant of mining lease/royalty in a related case.

The Government Pleader, Commercial Tax, clarified that only a show cause notice had been issued. The court, after considering the ongoing deliberation before a Nine Judges Bench of the Supreme Court on whether GST should be charged on minerals where royalty had already been paid, acknowledged that the petitioner had made out a case for an interim order. Consequently, the court decided to stay the show cause notice dated 25.11.2021 issued to the petitioner until the disposal of related cases before the Supreme Court. The parties were granted liberty to mention the matter after the disposal of the Supreme Court cases, and directions were given to complete the pleadings in the meantime. The court listed the matter for further proceedings post the disposal of relevant cases before the Supreme Court.