2024 (7) TMI 365 - HC - GST

GST Royalty Levy: Recovery Halted Until Supreme Court Decision; Petitioner Can File Reply, Adjudication on Hold.

The Writ Petition was disposed of following guidelines from a Division Bench order, pending the Supreme Court's decision on GST levy on royalty. The ... Abeyance of recovery pending higher judicial determination - stay of adjudication until the decision of the Constitutional Bench - levy of GST on royalty paid to the Government - right of the assessee to file reply to show cause notice - liberty to proceed for recovery if levy is upheldAbeyance of recovery pending higher judicial determination - stay of adjudication until the decision of the Constitutional Bench - Respondents were directed to keep recovery in abeyance and to hold adjudication pending the decision of the Nine Judges Constitutional Bench of the Hon'ble Supreme Court on the levy of GST on royalty paid to the Government. - HELD THAT: - The Division Bench's earlier order in the batch proceeding was applied to the present petition, under which show cause notices were to be kept pending the Supreme Court reference. Having regard to those guidelines and the pendency of the Constitutional Bench decision, the High Court disposed of the writ petition by directing that recovery be kept in abeyance until the higher court decides the issue. The court noted that the assessee had an opportunity to file a reply to the show cause notice as permitted under the earlier order and that adjudication should await the Supreme Court's determination. [Paras 5]Recovery to be kept in abeyance and adjudication held in abeyance pending the Supreme Court's decision.Levy of GST on royalty paid to the Government - liberty to proceed for recovery if levy is upheld - If the Supreme Court upholds the levy, respondents may proceed to recover tax; if the issue is decided against the revenue, the impugned order shall be deemed quashed from the date of the Supreme Court's order. - HELD THAT: - The court preserved the substantive consequences contingent on the outcome of the Constitutional Bench reference. It expressly authorised the revenue to pursue recovery in the event the Supreme Court upholds the GST levy on government-paid royalty, while providing that an adverse decision for the revenue would operate to quash the impugned order retrospectively from the date of the Supreme Court's decision. This approach balances interim protection to the assessee with the revenue's right to enforce a binding higher-court determination. [Paras 6]Respondents may proceed with recovery if the levy is upheld; if the Supreme Court decides against the revenue, the impugned order shall be deemed quashed from the date of that decision.Final Conclusion: The writ petition is disposed by directing abeyance of recovery and adjudication pending the Nine Judges Constitutional Bench decision on GST on royalty paid to the Government; directions preserve the respondents' right to recover if the levy is upheld and provide that the impugned order will stand quashed from the Supreme Court's order if the issue is decided against the revenue. Issues Involved:1. Disposal of Writ Petition based on guidelines from a Division Bench order2. Guidelines issued regarding show cause notice and pending Supreme Court decision on GST levy3. Permission for assessee to file reply and keeping adjudication in abeyance4. Petitioner approaching after the impugned order5. Direction to keep recovery abeyance pending Supreme Court orders6. Authority to proceed with recovery based on Supreme Court decisionAnalysis:1. The Writ Petition was disposed of based on the guidelines provided in a Division Bench order dated 08.01.2024 in a batch of Writ Petitions. The guidelines pertained to the show cause notice issued and were directed to be kept pending the order of the Hon'ble Supreme Court on the reference concerning the levy of GST on royalty paid to the Government.2. The assessee was allowed to file their reply, and the Authorities were instructed to keep the adjudication in abeyance until the Nine Judges Constitutional Bench of the Hon'ble Supreme Court decides on the issue related to GST levy. This decision was crucial in determining the further course of action regarding the tax matter in question.3. Despite the petitioner approaching after the impugned order was passed, the Court directed the respondent to keep the recovery abeyance pending further orders from the Hon'ble Supreme Court. This decision aimed to ensure fairness and justice in the proceedings, considering the ongoing legal developments and uncertainties surrounding the tax issue.4. In case the levy is upheld by the Supreme Court, the respondents were given the liberty to proceed against the petitioner to recover the tax amount. Conversely, if the Supreme Court ruled against the revenue on the issue, the impugned order would be deemed quashed from the date of the Supreme Court's decision. This provision ensured clarity and specified the actions to be taken based on the final judicial determination.5. The Writ Petition was concluded with the aforementioned directions, and no costs were imposed. Additionally, the connected miscellaneous petitions were closed as a result of the judgment. The detailed analysis of each issue addressed in the judgment reflects the Court's meticulous consideration of the legal aspects and the need to maintain procedural fairness and compliance with the law.