Interim tax relief on mining royalty granted for service tax recovery, while GST challenge was left without protection

Interim relief was granted against recovery of service tax on royalty paid for a mining lease, while the revenue was allowed to continue assessment proceedings and the merits were left open for fuller hearing. The challenge to CGST and JGST on royalty and district mineral fund contribution was treated as premature at the interim stage because no final tax determination had been made, so no interim restraint was granted on that side. The proceedings were kept pending for counter-affidavit and further consideration.

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Issues: (i) Whether recovery of service tax on royalty paid for grant of mining lease should be stayed pending adjudication. (ii) Whether interim protection should be granted against levy of CGST and JGST on royalty and district mineral fund contribution.

Issue (i): Whether recovery of service tax on royalty paid for grant of mining lease should be stayed pending adjudication.

Analysis: The writ petitions challenged the levy on royalty for minor minerals under the service tax regime and sought interim protection. The Court noted that similar challenges had already led to interim protection in other proceedings and that the revenue's assessment machinery need not be interdicted even if recovery was deferred. The questions on merits were left open for fuller consideration after pleadings.

Conclusion: Recovery of service tax on royalty was stayed, while the revenue was permitted to continue assessment proceedings.

Issue (ii): Whether interim protection should be granted against levy of CGST and JGST on royalty and district mineral fund contribution.

Analysis: The challenge to GST and JGST was treated as premature at the interim stage because the respondents had only called for information and no final tax determination had been made. The Court was not satisfied that a case for interim restraint had been made out on the GST side.

Conclusion: No interim protection was granted against levy of CGST or JGST.

Final Conclusion: Interim relief was confined to staying recovery of service tax on royalty, while the GST and JGST challenges were left without protection at this stage and the proceedings were kept pending for counter-affidavit and further hearing.

Ratio Decidendi: Where a tax levy challenge is at an interim stage and no final determination has been made, recovery may be stayed for one regime while assessment may continue, but interim restraint need not be granted for a separate levy that is found to be premature for consideration.

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