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2024 (11) TMI 376 - HC - GSTLevy 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-17) dated 15.12.2022 17), (Annexure P-19) dated 22.06.2023, (Annexure P-20) dated 12.10.2023, (Annexure P-27) dated 30.10.2023 and summons (Annexure P-26) dated 23.10.2023 are upheld and the instant petition is accordingly dismissed.
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 to quash various notifications and notices related to the levy of GST on mining royalty. The petitioner argued that GST on royalty is illegal, unjust, and unconstitutional. The key issue was whether GST could be imposed on royalty paid by a mineral concession holder for a mining concession granted by the State. The petition relied on a previous judgment by a Seven-Judge Bench of the Supreme Court in India Cement Ltd. case, where royalty was considered a tax. However, this argument was weakened as a subsequent Nine-Judge Bench ruling in Mineral Area Development Authority case overturned the India Cement Ltd. judgment, stating that royalty is not a tax. This change in legal interpretation allowed the respondents to levy GST on mining royalty. As a result, the High Court upheld the validity of the notifications and notices imposing GST on mining royalty. The court dismissed the petition and upheld the orders issued by the respondents. The parties were directed to bear their own costs, and any pending applications were also dismissed in light of the judgment.
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