Court orders payment of excise duty under protest, citing contractual obligations and pending royalty tax decision.

The court directed the petitioners to pay the differential excise duty to the respondents-Coal companies by a specified date, treating the payment as made under protest. The court emphasized the contractual obligations under the "Spot e-Auction Scheme 2007" and the pending Supreme Court decision on whether royalty is considered a tax. Refund issues were to be determined based on the Supreme Court's ruling and the principle of "Unjust Enrichment." The court stressed the importance of maintaining equilibrium in the recovery of sovereign dues, disposing of the writ petitions accordingly.

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Issues Involved:
1. Recovery of excise duty on coal including royalty.
2. Whether royalty is considered a tax under Section 4(3)(d) of the Central Excise Act, 1944.
3. Contractual obligations under the "Spot e-Auction Scheme 2007".
4. Arbitration clause applicability.
5. Payment of differential excise duty under protest and potential refund.

Detailed Analysis:

1. Recovery of excise duty on coal including royalty:
The petitioners challenged the action initiated by the respondents for the recovery of excise duty on coal. Excise duty on coal became leviable from 1st March 2011 on an ad valorem basis. The petitioners argued that the amount of royalty paid should not be included in the transaction value as defined under Section 4(3)(d) of the Central Excise Act, 1944. The Union of India demanded differential excise duty, which the respondents-Companies had already paid. The petitioners contended that royalty should be considered as "other taxes" and thus not part of the "transaction value", making the excise duty on royalty non-recoverable.

2. Whether royalty is considered a tax under Section 4(3)(d) of the Central Excise Act, 1944:
The counsels for the petitioners relied on several Supreme Court decisions, including India Cement Limited v. State of Tamil Nadu, where it was held that "royalty is a tax". This matter has been referred to a Larger Bench of the Supreme Court, and the petitioners requested that any amount deposited be kept in a separate account pending the Supreme Court's decision on whether royalty is a tax.

3. Contractual obligations under the "Spot e-Auction Scheme 2007":
The respondents-Companies argued that under the "Spot e-Auction Scheme 2007", the petitioners were liable for all statutory levies, including royalty and excise duty. Clause 4.4 of the scheme explicitly states that buyers must pay these charges. The court found that the terms and conditions of the scheme were binding on the parties, making the petitioners responsible for the payment of differential excise duty.

4. Arbitration clause applicability:
Clause 11.12 of the "Spot e-Auction Scheme 2007" provides for arbitration in case of disputes. The court noted that the contract between the parties was commercial rather than statutory and included an arbitration clause. However, given the pending Supreme Court decision, the court did not entertain the writ petitions at this stage.

5. Payment of differential excise duty under protest and potential refund:
The court directed the petitioners to pay the differential excise duty to the respondents-Coal companies by 25th February 2016, treating the payment as made under protest. The court emphasized that the payment would be subject to the outcome of the Supreme Court's decision on whether royalty is a tax. The court also noted that the issue of refund would depend on the Supreme Court's directions and the principle of "Unjust Enrichment".

Conclusion:
The court disposed of the writ petitions, directing the petitioners to pay the differential excise duty to the respondents-Coal companies by the specified date. The payment would be under protest, pending the Supreme Court's decision on the matter of royalty being a tax. The court emphasized the binding nature of the contractual terms under the "Spot e-Auction Scheme 2007" and the necessity of maintaining equilibrium in the recovery of sovereign dues.

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