2026 (3) TMI 1134 - HC - GST

Abeyance of proceedings on GST levy of seigniorage fee pending higher court decision; conditional deposit required.

Assessment and recovery proceedings under GST concerning levy on seigniorage fee/royalty and alleged reverse charge liability are to be kept in abeyance ... Assessment and recovery proceedings initiated under the GST enactments concerning levy of GST on seigniorage fee/royalty - non-compliance under the reverse charge mechanism - Stay of departmental proceedings pending higher court decision - conditional deposit for interim relief. Proceedings initiated under the GST enactments were to be kept in abeyance pending the decision of the Hon'ble Supreme Court on levy of GST on seigniorage fee/royalty - HELD THAT:- The Court, noting that an identical question regarding levy of GST on seigniorage fee/royalty is pending before the Hon'ble Supreme Court and relying on its earlier order in S. Pichandhi [2025 (9) TMI 1765 - MADRAS HIGH COURT], disposed the writ petition at the admission stage and directed the Respondent to keep all proceedings in abeyance and to await the orders of the Hon'ble Supreme Court. The Court applied its prior direction to the facts of the present petition as the facts were found to be almost identical and did not adjudicate the underlying tax liability on merits. [Paras 3, 5, 6] The respondent was directed to keep the impugned proceedings in abeyance and await the Supreme Court's decision. Following the approach in the Court's earlier order in S. Pichandhi, the petitioner was directed to deposit 10% of the disputed tax as security while the departmental proceedings remain in abeyance. This condition was imposed as part of the interlocutory arrangement and not as a determination on the substantive tax liability. [Paras 5, 6] Final Conclusion: The writ petition was disposed of at the admission stage by directing the respondent to keep the impugned GST proceedings in abeyance and to await the Supreme Court's decision on the levy of GST on seigniorage fee/royalty, subject to the petitioner depositing 10% of the disputed tax as security; no costs. Issues: (i) Whether the assessment and recovery proceedings arising from GST notices and assessment orders issued for alleged non-registration and non-payment of GST on seigniorage fee/royalty should be kept in abeyance pending the decision of the Hon'ble Supreme Court, and whether interim relief in the form of a conditional deposit is appropriate.Analysis: The proceedings under challenge arise from assessment and summary orders under the GST enactments concerning levy of GST on seigniorage fee/royalty and alleged non-compliance under the reverse charge mechanism. The question of levy is pending before the Hon'ble Supreme Court and there exists a prior High Court order in closely similar facts directing that proceedings be kept in abeyance until the Supreme Court decides the issue, with an interim condition that the petitioner deposit a portion of the disputed tax as security. The present petition involves substantially identical factual and legal issues and no new legal controversy has been raised that would require a different course of action.Conclusion: (i) The assessment and recovery proceedings are to be kept in abeyance pending the decision of the Hon'ble Supreme Court on the levy of GST on seigniorage fee/royalty; the petitioner is directed to deposit 10% of the disputed tax as security. The writ petition is disposed of on the same terms as the earlier decision.