2022 (9) TMI 1442 - HC - GST

Corporate Royalty and DMFT Tax Disputes: GST Assessment Orders Partially Upheld with Nuanced Legal Interpretation

Shree Basant Bhandar Int Udyog And Ors. Versus Union of India; The State of Rajasthan; Assistant Commissioner, Sri Ganganagar And Ors.

HC addressed writ petitions challenging GST assessment orders on royalty and DMFT contributions. Court denied relief for GST on royalty based on previous ... Challenge to SCN//assessment orders issued by the respondent GST Department raising demand of GST on royalty paid by the writ petitioners to the respondent Mining Department towards their respective mining leases - HELD THAT:- The right of the respective petitioners to file replies and raise objections against the show cause notices issued to them or to file appeal against final assessment orders is a statutory remedy provided under the GST Act and thus are free to avail such remedy irrespective of the fate of the writ petition. However, analogous controversy regarding demand of GST on royalty stands concluded in SUDERSHAN LAL GUPTA CONTRACTOR VERSUS UNION OF INDIA, STATE OF RAJASTHAN, CENTRAL BOARD OF INDIRECT TAXES AND CUSTOMS, DEPUTY COMMISSIONER OF STATE TAX, CIRCLE KARAULI, RAJASTHAN [2022 (10) TMI 43 - RAJASTHAN HIGH COURT]. Petition dismissed. Issues:Challenge to show cause notices/assessment orders for GST on royalty and DMFT contribution.Analysis:1. Challenge to GST on Royalty:The writ petitions involved a common challenge by the petitioners against show cause notices and assessment orders issued by the respondent GST Department, demanding GST on royalty paid for mining leases. The petitioners contended that a previous Division Bench did not adjudicate the merits of the matter, leading to dismissal based on earlier orders unrelated to the current controversy. The respondents argued that since a Coordinate Bench had already rejected a similar challenge to GST on royalty, these writ petitions should also be dismissed. The Court noted that the petitioners have the statutory remedy to file replies, raise objections, or appeal against the notices, regardless of the writ petition's outcome. However, the Court concluded that the issue of GST on royalty was settled in a previous judgment dated 27.09.2022. Consequently, relief against GST on royalty was denied for certain writ petitions, while the challenge to GST on DMFT contribution was permitted for specific cases.2. Demand of GST on DMFT Contribution:In addition to the challenge on GST on royalty, the issue of demand of GST on contribution to DMFT was raised in ten writ petitions. The Court allowed relief to continue for the DMFT contribution in some cases while rejecting relief against GST on royalty. The remaining batch of writ petitions was dismissed in line with the judgment in the case of Sudershan Lal Gupta, which addressed similar issues. Therefore, the Court deferred consideration on the remaining issues for specific writ petitions, focusing on the demand of GST on royalty.3. Legal Representation:The legal representation for the petitioners included multiple counsels such as Mr. Sharad Kothari, Mr. Lokesh Mathur, and others, while the respondents were represented by Mr. Sandeep Shah and a team of advocates. The arguments put forth by both sides centered on the interpretation of previous judgments and the statutory remedies available to the petitioners under the GST Act.4. Court's Decision:After hearing the submissions and reviewing the records, the Court clarified the petitioners' right to avail statutory remedies despite the judgment's outcome. The Court differentiated between the issues of GST on royalty and DMFT contribution, allowing relief for the latter in certain cases. The judgment in the case of Sudershan Lal Gupta was pivotal in determining the fate of the writ petitions, leading to the dismissal of some petitions while deferring others for further consideration on remaining issues apart from GST on royalty.