Interim stay on service tax notice over royalty for mining, as taxability issue remains pending in connected matters.

Service tax was challenged on royalty payable for mining of minerals on the ground that royalty is not consideration for any supply and that the taxability issue was already before the Supreme Court and another coordinate bench. Noting that similar matters were already under interim protection and that the wider controversy remained pending, the HC found a case for preserving the status quo. Interim stay was granted against the demand-cum-show cause notice, and the petition was kept pending for proceedings with the impugned notice stayed until further orders.

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Issues: Whether interim protection should be granted against the demand-cum-show cause notice for service tax in relation to royalty payable on mining of minerals.

Analysis: The impugned notice was challenged on the basis that royalty on mining is not consideration for any supply and that the issue of taxability of royalty had already engaged the attention of the Supreme Court and another coordinate bench. In view of the interim protection already granted in similar matters and the pendency of the larger controversy, the petitioner was found to have made out a case for interim relief.

Conclusion: Interim stay was granted against the impugned demand-cum-show cause notice with respect to service tax.

Final Conclusion: The petition was kept pending for further proceedings while the impugned notice remained stayed until further orders.

Ratio Decidendi: When a similar taxability issue is already under interim protection in connected matters, interim relief may be granted to preserve the status quo pending adjudication.

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