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TMI Blog2024 (8) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... osed off. - Honourable Mr. Justice C. Saravanan For the Petitioner in all W.Ps. : Mr. S. Karunakar For the Respondent in all W.Ps. : Mr. J.K. Jayaselan Government Advocate COMMON ORDER By this common order, all the four writ petitions are being disposed of. 2. The case of the petitioner is that on the mining activity, no GST is payable by the petitioner and that the petitioner has been taking consistent stand that the matter was subjudiced before the Hon'ble Supreme Court. It is submitted that despite the same, the respondent has levied tax under reverse charge mechanism on the mining activity carried out by the petitioner. 3. It is submitted that the petitioner is also selling the mines and minerals and therefore, the petitioner had availed input tax credit on various input supplies and there were certain discrepancies, which have been met with. As far as the tax payable on reverse charge basis on the mining activity is concerned, it is submitted that the respondent ought not to have confirmed the demand. 4. It is submitted that the Hon'ble Supreme Court has now stayed the recovery of tax on the mining activity in M/s.Lakhwinder Singh Vs. Union of India in WP (Civil) No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority of India and another etc. ]. The Hon'ble Supreme Court has passed a detailed order consisting of majority view running to 200 pages and minority view running to 193 pages. The majority view has concluded as follows:- ''342. In view of the above discussion, we answer the questions formulated in the reference in terms of the following conclusions: a. Royalty is not a tax. Royalty is a contractual consideration paid by the mining lessee to the lessor for enjoyment of mineral rights. The liability to pay royalty arises out of the contractual conditions of the mining lease. The payments made to the Government cannot be deemed to be a tax merely because the statute provides for their recovery as arrears; b. Entry 50 of List II does not constitute an exception to the position of law laid down in M P V Sundararamier (supra). The legislative power to tax mineral rights vests with the State legislatures. Parliament does not have legislative competence to tax mineral rights under Entry 54 of List I, it being a general entry. Since the power to tax mineral rights is enumerated in Entry 50 of List II, Parliament cannot use its residuary powers with respect to that subject-matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Article 366(28) of the Constitution which defines taxation to include the imposition of any tax or impost, whether general or local or special and the word tax is to be construed accordingly. b. What is the scope of Entry 50 - List II of the Seventh Schedule? What is the ambit of the limitations imposable by Parliament in exercise of its legislative powers under Entry 54 - List I? Does Section 9, or any other provision of the MMDR Act, contain any limitation with respect to the field in Entry 50 - List II? Entry 50 - List II of the Seventh Schedule is, no doubt, a taxation Entry which deals with taxes on mineral rights. But this Entry is subject to any limitations imposed by Parliament by law relating to mineral development. The use of the word any means the limitation could be in any form which can be imposed only by the Parliament by law relating to mineral development. In view of the use of the expression any limitations , it must be given the widest possible meaning to include a limitation in the form of Sections 9 and 9A, 25 or any other provision of the MMDR Act, 1957 and Rules made thereunder which act as a limitation to Entry 50 - List II. c. Whether the expression subj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent but a statutory levy under Section 9 of the Act (Section 9A relating to dead rent). The liability to pay royalty does not arise purely out of the contractual conditions of a binding lease. The payment of royalty to the Government is a tax in view of Entry 50 - List II being subject to any limitations imposed by Parliament by law in the context of Entry 54 - List I read with Section 2 of the MMDR Act, 1957. b. Entry 50 - List II is an exception to the position of law laid down in MPV Sundararamier vs. State of Andhra Pradesh, AIR 1958 SC 468 ( MPV Sundararamier ) . Moreover, in the said case, the scope and ambit as well the implication of Entry 54 List I on Entry 50 - List II was not considered at all. Therefore, the principle stated in MPV Sundararamier is foreign to the instant case and the ratio of the said decision does not apply to the present case. No doubt, the legislative power to tax mineral rights vests with the State legislature but Parliament, though may not have an express power to tax mineral rights under Entry 54 - List I, it being a general Entry, Parliament can, nevertheless on the strength of Entry 54 - List I read with Section 2 of the MMDR Act, 1957, impose a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I, no doubt, operate in different fields. Entry 49 - List II deals with taxes on lands and buildings but Entry 50 - List II deals with taxes on mineral rights subject to any limitations imposed by Parliament by law relating to mineral development. There is no constitutional limitation on the competence of the State legislature to tax lands and buildings. However, the State s competence to tax mineral rights is subject to any limitations imposed by the Parliament by law relating to mineral development. Entry 49 List II and Entry 50 - List II are distinct and operate in distinct ways. Entry 49 - List II does not apply to mineral bearing lands as such lands are taxed in the form of royalty or dead rent in the context of exercise of mineral rights. Exercise of mineral rights is the basis for payment of royalty or dead rent. Consequently, value of mineral produced cannot be used as a measure to once again impose a tax on mineral bearing land under Entry 49 List II. If so, Entry 50 List II would be rendered redundant. i. As Entry 49 - List II does not apply to mineral bearing land, the limitations imposed by Parliament by law relating to mineral development with respect to Entry 50 - Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... try is directed to place these matters before Hon ble the Chief Justice of India for directions on listing the matters before the appropriate Bench. I must place on record my sincere appreciation to the learned Attorney General, learned Solicitor General and their teams, learned senior counsel appearing for the respective parties, learned instructing counsel and learned counsel for the respective parties for their valuable assistance to this Bench.'' 8 . However, the main issue insofar as levy of GST on the mining activities is concerned, the final decision of the Hon'ble Supreme Court is awaited as per the recent order of the Hon'ble Supreme Court dated 24.07.2024 in the batch of cases in Udaipur Chambers of Commerce and Industry and others vs. Union of India and others [Special Leave to Appeal (C)No.37326 of 2017]. The cases are likely to be listed for hearing during the third week of August, 2024. 9 . In view of the above, the recovery proceedings pursuant to the impugned orders shall be kept in abeyance pending disposal of the appeal by the Hon'ble Supreme Court. The petitioner is given liberty to file a statutory appeal to keep the issue alive. However, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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