Mining Royalty Tax Challenge: Interim Protection Granted Against GST Levy, Recovery Stayed Pending Further Review

HC granted interim protection to petitioner challenging GST levy on mining royalty. The court stayed recovery of GST for mining lease/royalty and directed revenue authorities to file counter affidavit. The interim order aligns with similar protection granted in previous writ petitions, allowing assessment proceedings while maintaining status quo on tax recovery.

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Issues involved:
The issue involves the levy of GST on royalty in respect of Financial Years 2017-2018 to 2021-2022, concerning a petitioner who is a lessee of minor minerals in the district of Bokaro. The petitioner seeks interim protection similar to that granted in a batch of writ petitions led by W.P (T) No. 432/2021.

Summary of Judgment:

Issue 1 - Levy of GST on royalty:
The petitioner challenged the adjudication order passed under section 73 of JGST Act, 2017 holding them liable to pay GST on royalty for the mentioned financial years. An interim order dated 20.04.2022 stayed the recovery of GST for grant of mining lease/royalty/DMF from the petitioner until further orders. The court allowed three weeks for the CGST and State to file a counter affidavit and an additional one week for the petitioner to file a reply.

Issue 2 - Interim Protection:
The court noted that the case of the petitioner regarding the levy of GST on royalty aligns with the interim order passed in W.P (T) No. 432/2021. The interim order granted protection on the levy of GST on mining lease/royalty/DMF until further orders, while allowing the Revenue to conduct and complete assessment proceedings. Similar interim protection was granted in other cases challenging the levy of service tax on royalty/DMF, and those cases were also to be governed by the interim order dated 02.03.2021.

Conclusion:
The matter was to be listed along with W.P (T) No. 432/2021 for further proceedings, maintaining the stay on the recovery of GST for grant of mining lease/royalty/DMF until further orders. The court emphasized the interim protection granted and the pending legal position regarding royalty as a tax or profit pendre.

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