2024 (3) TMI 440 - HC - GST

Levy of GST - royalty payment - petitioner has vehemently urged that 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 Ltd. and Others vs. State of Tamil Nadu and Others 1989 (10) TMI 53 - SUPREME COURT , wherein, nature of royalty payment was considered and it was opined to be in the nature of tax. Also, it has been shown that a similar controversy is engaging the attention of the Supreme Court in M/s Lakhwinder Singh vs. Union of India Ors. 2021 (11) TMI 336 - SC ORDER . On 04.10.2021, the Supreme Court has held Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed. Until further orders, payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed - List along with Writ Tax No.18 of 2024.

Summary

Issues involved:
The issue in this case revolves around whether royalty payment for mining sand is considered as tax or consideration for GST purposes.

Summary:
The petitioner argued that royalty payment is not subject to GST as it is not considered as consideration for the privilege of mining sand. Reference was made to a Supreme Court decision in India Cement Ltd. case where royalty payment was deemed to be in the nature of tax. The petitioner also highlighted a similar issue pending before the Supreme Court in the case of M/s Lakhwinder Singh vs. Union of India & Ors. where the payment of GST for grant of mining lease/royalty was stayed until further orders. The court listed the matter along with Writ Tax No.18 of 2024 and ordered that the payment of GST for grant of mining lease/royalty shall remain stayed until further orders.