Sand Mining Royalty Tax Challenge: GST Applicability Suspended Pending Comprehensive Legal Review of Payment Mechanisms

SC determined that royalty payment for mining sand's GST applicability requires further examination. The court issued an interim stay on GST payment for mining lease/royalty, aligning with a pending similar case. The matter was listed for comprehensive review, temporarily halting GST collection pending final judicial determination of the tax's legal status.

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Issues involved:
The issue in this case revolves around whether royalty payment for mining sand is considered as tax or consideration for GST purposes.

Summary:
The petitioner argued that royalty payment is not subject to GST as it is not considered as consideration for the privilege of mining sand. Reference was made to a Supreme Court decision in India Cement Ltd. case where royalty payment was deemed to be in the nature of tax. The petitioner also highlighted a similar issue pending before the Supreme Court in the case of M/s Lakhwinder Singh vs. Union of India & Ors. where the payment of GST for grant of mining lease/royalty was stayed until further orders. The court listed the matter along with Writ Tax No.18 of 2024 and ordered that the payment of GST for grant of mining lease/royalty shall remain stayed until further orders.

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