GST on Royalty: objections allowed and adjudication stayed from recovery pending higher bench decision.

Show Cause Notice seeking levy or recovery of GST on seigniorage/royalty: petitioner is permitted to file objections/representations within four weeks; the authority must adjudicate the proceedings on merits after affording opportunity to be heard. The court applied earlier Division Bench directions in A. Venkatachalam permitting such submissions and directing that orders of adjudication be kept in abeyance with no recovery of GST on royalty pending decision of the Nine Judge Constitution Bench/Supreme Court. Implementation or recovery pursuant to any assessment is stayed until the higher bench decides the question.

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Issues: Whether the Show Cause Notice seeking levy/ recovery of GST on seigniorage/royalty should be adjudicated but its implementation and recovery kept in abeyance pending the decision of the Nine Judge Constitution Bench / Hon'ble Supreme Court, and whether the petitioner should be permitted to file objections/representations to the Show Cause Notice.

Analysis: The Court applied the directions issued by the Division Bench in A. Venkatachalam v. Assistant Commissioner (ST), Palladam in W.P. No. 30974 of 2022, which permit submission of objections/representations within four weeks, require adjudication on merits after affording opportunity of being heard, and direct that orders of adjudication be kept in abeyance with no recovery of GST on royalty until the Nine Judge Constitution Bench decides the question. The present petition involves substantially similar factual and legal questions concerning GST on royalty/seigniorage and is pending consideration at the Supreme Court, making the Division Bench directions applicable.

Conclusion: The petitioner is permitted to submit objections/representations to the Show Cause Notice within four weeks and the authority shall adjudicate the proceedings on merits after hearing, but any implementation or recovery pursuant to the assessment shall be kept in abeyance pending the decision of the Nine Judge Constitution Bench / Hon'ble Supreme Court.

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