Interim Order Halts Service Tax on Mining Lease/Royalty Pending Undertaking

The court granted an interim order staying the payment of service tax for the grant of Mining Lease/Royalty until further orders, subject to the petitioner filing an undertaking. The court also accepted the petitioner's application to dispense with the production of certified copies of certain annexures for 8 weeks to streamline the legal process and reduce procedural burdens.

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Issues:
Challenge to the constitutional validity of Section 174 of the Central Goods and Services Tax Act, 2017; Quashing of show cause notice dated 09.07.2020.

Analysis:
The petitioner, Shashank S. Hegde, has challenged the constitutional validity of Section 174 of the Central Goods and Services Tax Act, 2017, alleging it to be ultra vires the constitutional (101st) Amendment Act 2016 and violative of Article 14, 19, and 265 of the Constitution of India. The petitioner also sought the quashing of a show cause notice dated 09.07.2020. The learned counsel for the petitioner pointed out that a similar issue is pending before the Hon'ble Apex Court in SLP No. (C) 37236/2017, where an interim order has been granted for the payment of service tax related to the grant of Mining lease/Royalty by the petitioner.

In light of the interim order passed by the Hon'ble Apex Court and the subsequent interim order by the Gujarat High Court on the same matter, the petitioner's counsel argued that grounds exist for the granting of an interim order in this case as well. Consequently, the court ordered that the payment of service tax for the grant of Mining Lease/Royalty shall remain stayed until further orders, subject to the petitioner filing an undertaking before the court. The undertaking required the petitioner to discharge the obligation for payment of service tax on the royalty in case the petitioner did not succeed in the petition.

Additionally, the petitioner filed I.A.No.1/2020 seeking dispensation of the production of certified copies of Annexure-A, C, D, and E. The court accepted the reasons provided in the application and dispensed with the production of certified copies of the mentioned annexures for a period of 8 weeks. This decision aimed to facilitate the proceedings and alleviate any unnecessary procedural burdens on the petitioner during the legal process.

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