GST Demand on Limestone Mining Royalty Stayed Pending Supreme Court's Constitutional Bench Decision

The HC of Meghalaya stayed a GST demand on limestone mining royalty pending final resolution. The Court noted that the broader question of GST applicability on mining royalties is currently before the SC in a Constitution Bench matter. The petitioner cited an earlier SC order that had granted interim relief in a similar case. The HC ordered that the impugned demand notice dated February 7, 2022, would remain stayed until the petition's disposal, and scheduled further proceedings for July 8, 2022, awaiting guidance from the SC's decision on the constitutional issue.

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Issues involved:
Applicability of goods and services tax on royalty paid for mining limestone in the State.

Analysis:
The judgment by the High Court of Meghalaya dealt with the issue of whether goods and services tax (GST) is applicable on royalty paid for mining limestone in the State. The Court noted that the larger question of tax liability on mining royalty is pending before the Supreme Court. The petitioner referred to an order from October 2021 where the Supreme Court directed a special leave petition related to a similar issue to be tagged with a case concerning the payment of GST on royalty. In that case, the Supreme Court had granted unconditional interim relief, staying the demand for GST on mining lease/royalty. Consequently, the High Court ordered that the demand mentioned in the impugned notice dated February 7, 2022, should remain stayed until the current petition is disposed of.

The Court directed the filing of an affidavit-in-opposition within six weeks, with a fortnight provided for any reply. The next hearing was scheduled eight weeks from the date of the order. Given that the question of GST applicability on royalty is sub judice before a Constitution Bench of the Supreme Court, the High Court decided to await the outcome of the Supreme Court's decision before proceeding further. The case was listed for the next hearing on July 8, 2022, indicating a temporary halt in the proceedings pending the Supreme Court's ruling on the issue.

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