Order date – 3 April 2023

Parties – M/s RQS Mining Private Limited Vs Commissioner of State Tax, State Tax Department & Ors.

Facts –

• The petitioner, M/s RQS MINING PRIVATE LIMITED, was issued show-cause notice dated 28.05.2022 asking for a reply on why taxes worth Rs. 2,58,577.92 should not be levied on the petitioner for the period July 2017 to March 2018 on account of GST on royalty.
• The petitioner has submitted that the court has already granted interim protection from GST levy on royalty in a batch of writ petitions led by W.P.(T) No. 432 of 2021 in the case of M/s Mandhan Minerals Corporation Vrs. Union of India and others, and similar interim protection may be granted to the petitioner pending final adjudication.

Issue –

• Whether the notice issued to the Petitioner for payment of GST on royalty be quashed?

Order –

• The Court cited the legal position that royalty has been considered to be a tax or profit pendre and that the issue is pending before a 9 Judge Constitution Bench.
• Therefore, the court concluded that the petitioners have made out a case for interim protection, and there shall be a stay of recovery of GST for the grant of mining lease/royalty/DMF from the petitioners until further orders. However, the Revenue is not restrained from conducting and completing assessment proceedings.
• The Court also noted that interim protection was granted earlier in Sunita Ganguly and others Vrs. Union of India & others, and similar interim protection is being granted in several other writ petitions challenging the levy of service tax on royalty/DMF, in accordance with an order dated 02.03.2021. 
• The case is listed along with W.P. (T) No. 432 of 2021 and analogous cases.