2024 (11) TMI 375 - HC - GST

Levy of GST on Royalty paid by a Mineral Concession Holder for any mining concession granted by the State - Constitutional validity of N/N. 11/2017-Central Tax (Rate) dated 28.06.2017, N/N. 1/2017-Central Tax (Rate) dated 28.06.2017 (Annexure P-2), Himachal Pradesh Govt. N/N. 11/2017 dated 30.06.2017, Himachal Pradesh Govt. N/N. 1/2017 dated 30.06.2017, N/N. 27/2018-Central Tax (Rate) dated 31.12.2018 and Himachal Pradesh Govt. N/N. 27/2018 dated 31.12.2018 - HELD THAT - It is not in dispute that the judgment rendered in INDIA CEMENT LIMITED VERSUS STATE OF TAMIL NADU 1989 (10) TMI 53 - SUPREME COURT has now been overruled by Nine-Judge Bench of the Hon ble Supreme Court in MINERAL AREA DEVELOPMENT AUTHORITY ANR. VERSUS M/S STEEL AUTHORITY OF INDIA ANR ETC. 2024 (7) TMI 1390 - SUPREME COURT (LB) , wherein it has been held that royalty is not a tax. Therefore, the respondents are well within their rights to levy GST on the royalty paid by the mineral concession holder for any mining concession granted by the State. The orders impugned herein i.e. notices (Annexure P-15) dated 09.12.2022 (Annexure P-16) dated 09.01.2023 and summons (Annexure P-17) dated 06.01.2023 (Annexure P-18) dated 12.04.2023, are upheld and the instant petition is accordingly dismissed.

Summary

Issues:
1. Whether GST can be levied on royalty paid by a Mineral Concession Holder for any mining concession granted by the State.

Analysis:
The petition sought the quashing of various notifications and demands related to GST on royalty paid by a Mineral Concession Holder. The primary issue was whether GST could be imposed on such royalty payments. The petition relied on a previous judgment by the Supreme Court in India Cement Ltd.'s case, which had declared royalty itself as a tax. However, this argument was countered by a subsequent judgment by a Nine-Judge Bench in Mineral Area Development Authority v. M/s Steel Authority of India, which clarified that royalty is not a tax. Therefore, it was determined that the respondents were legally entitled to levy GST on royalty paid by mineral concession holders for mining concessions granted by the State.

The Court noted that the demand for GST on royalty had been stayed previously, but the subsequent Supreme Court ruling clarified the legal position. Consequently, the Court upheld the notices and summons issued by the respondents, dismissing the petition and any pending applications. The parties were directed to bear their own costs in the matter.

In conclusion, the judgment clarified the legal standing regarding the levy of GST on royalty paid by Mineral Concession Holders for mining concessions. The decision was based on the interpretation of relevant Supreme Court judgments and established legal principles.