TaxTMI 
TaxTMI 
2024 (4) TMI 1257
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....o. 6389 of 2024. - -<br>GST<br>HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD And HONOURABLE MR. JUSTICE SOURENDRA PANDEY Appearance : (In Civil Writ Jurisdiction Case No. 3531 of 2022) For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate For the UOI : Dr. Krishna Nandan Singh, Sr. Advocate Mr. Anshuman Singh, Sr. SC (CGST & CX), Mr. Shivaditya Dhari Sinha, Advocate (In Civil Writ Jurisdiction Case No. 16361 of 2022) For the Petitioner/s: Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate For the Respondent/s: Mr.Vikash Kumar (SC-11) (In Civil Writ Jurisdiction Case No. 17070 of 2022) For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate For the Respondent/s : Mr. Vikash Kumar (SC-11) (In Civil Writ Jurisdiction Case No. 17077 of 2022) For the Pet....
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....Petitioner/s : Mr.Gautam Kumar Kejriwal, Advocate For the Respondent/s : Mr. Standing Counsel (11) (In Civil Writ Jurisdiction Case No. 18206 of 2023) For the Petitioner/s : Mr. Gautam Kumar Kejriwal, Advocate For the Respondent/s : Mr. Standing Counsel (11) (In Civil Writ Jurisdiction Case No. 2730 of 2024) For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate. For the Respondent/s : Mr. Standing Counsel (11). (In Civil Writ Jurisdiction Case No. 4297 of 2024) For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate. For the Respondent/s : Mr. Standing Counsel 11. (In Civil Writ Jurisdiction Case No. 4562 of 2024) For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate. For the Respondent/s : Mr. Standing Counsel (11). (In Civil Wr....
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.... No. 18206 of 2023 117-120 11. CWJC No. 2730 of 2024 CWJC No. 4297 of 2024 120-124 12. CWJC No. 4562 of 2024 124-128 13. CWJC No. 6389 of 2024 128-130 CAV JUDGMENT (PER: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD) In the present batch of writ applications, the petitioners are raising a common question for consideration. On the request of the parties, the writ applications have been tagged and heard together on various dates. Mr. Sujit Ghosh, learned Senior Advocate, assisted by Mr. Suraj Samdarshi, learned Advocate has led the arguments. CWJC No. 3531 of 2022 has been taken as lead case. This Court would, therefore, refer the prayers and pleadings in the said writ application at first instance. The other learned Advocates for the petitioners have also made their submissions. The main contesting respondent is the State of Bihar. Mr. Vikas Kumar, learned Advocate and Standing Counsel No. 11 for the State has argued the matter at length. 2. By this common judgment, all the writ applications are being disposed of. In the lead case being CWJC No. 3531 of 2022, the petitioner has prayed for various reliefs. This Court would reproduce the reliefs prayed in the writ applicat....
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....39;ble Court may further adjudicate and hold that the order of Appellate Authority for Advance Ruling, Bihar dated 10.12.2021 is bad in law inasmuch as the same has been passed without considering the order contained in memо nо. 8763 dated 22.12.2020 passed by the Commissioner, Central GST and Central Excise, Patna 1, (Annexure 13), which was an order passed in relation to this petitioner with respect to a proceeding initiated under service tax regime, in which the claim of similar exemption under Sl. No. 61 of the Notification nо. 22/2016-ST dated 13.04.2016 was allowed and the proceeding was dropped. x) To grant any other relief or reliefs which the Petitioner may be found entitled to in the facts and circumstances of the case." Brief Facts of the Case 3. The petitioner is a company registered under the Companies Act, 1956 (hereinafter called 'the petitioner-company' or 'M/s BSCPL'). It is engaged in taking settlement of the sand ghats in the auction held by the Department of Mines and Geology, Government of Bihar. The petitioner-company became the successful bidder for the sand ghats of the district of Patna, Bhojpur and Saran as one unit, Rohtas and Aurang....
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....liability on the royalty paid to the Government under Reverse Charge Mechanism (in short 'RCM') by paying GST at the rate of 5% (2.5% CGST and 2.5% SGST) under the heading 9973, group 99733 and tariff code 99337 "licensing services for the right to use minerals including its exploration and evaluation" which attracted the same rate of GST as on supply of like goods involving transfer of title in goods. 7. It is the case of the petitioner that the aforesaid classification of services has been accepted by the Central Board of Indirect Taxes and Customs (In short 'CBIC') in its Circular No. 164/20/2021 and GST dated 06.10.2021 in which at paragraph '9.3.1' it has been clarified that supply of service by way of granting mineral exploration and mining rights most appropriately fall under service code 997337. It has also been clarified that for the period 01.07.2017 till 31.12.2018 such services shall attract tax at the rate of 18%. 8. It is the case of the petitioner that in order to confirm whether the petitioner was rightly discharging its tax liability on royalty paid to the Government under 'RCM' at the rate of 5% by classifying the same under residual entry of serial no. 17 of No....
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....g all the grounds. The petitioner claimed exemption from levy of GST by virtue of entry at serial no. 64 of Notification No. 12 of 2017 dated 28.06.2017. The petitioner also placed reliance on the order contained in Memo No. 8763 dated 22.12.2020 passed by the Commissioner, Central GST and Central Excise, Patna 1 which was an order passed in relation to this petitioner with respect to a proceeding initiated under service tax regime, in which the claim of similar exemption under Serial No. 61 of the Notification No. 22/2017-ST dated 13.04.2016 was allowed and the proceeding was dropped. 12. Learned counsel for the petitioner has further stated that vide order contained in Memo No. 341 dated 10.12.2021, the Appellate Authority for advance ruling allowed the appeal preferred by the Joint Commissioner, State Taxes/Department. However, the services of the petitioner has been held to be taxable at the rate of 18% (9% CGST+ 9% SGST) during the period 01.07.2017 to 31.12.2018 and at the rate of 18% (9% CGST+ 9% SGST) post 01.01.2019. The claim for exemption by the petitioner has been rejected. A copy of the appellate order of the Appellate Authority for advance ruling, Bihar is Annexure '....
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....nt of mineral concession/mining leases entail supply of services for a consideration, such consideration does not comprise only of service fee. Instead, it is a composite charge for regulatory as well as service fee and absent any mechanism to statutorily split these two elements, a charge of GST on the entire sum would be bad in law; D. Assuming arguendo that the entire royalty amount is construed as being towards service fee, then, if the taxable event has taken place prior to coming into force of GST, the State would have no jurisdiction to impose GST on such cases, merely because periodic payment of royalty is made post the commencement of GST; and E. Assuming arguendo that this Hon'ble Court is not persuaded with the proposition enumerated in Para A to D above, then the impugned decision of the Appellate Authority of Advance Ruling is bad in law and accordingly, the decision rendered by the Original Advance Ruling Authority holding that the rate of GST on services falling under SAC 997337 attracts GST at 5% up to 31.12.2018 and 18% from 1.1.2019, should be upheld." (i) Exclusion from GST - as has been provided to Liquor Industry 16. In order to support his submission....
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.... that even though these two sets of businesses form part of the same class, the State vide Notification No. 25/2019-Central Tax (Rate) dated 30.09.2019 has declared that services by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or application fee or whatever name called is to be treated neither as supply of goods nor as supply of services. The said Notification also explains that the same has been issued to implement the recommendations of the 26th GST Council Meeting where it was recommended that no GST shall be leviable on licence fee/application fee of the aforesaid nature. It is submitted that once a transaction is treated neither as a supply of goods nor a supply of service, the charging section viz Section 9 of the CSGT Act, 2017 would not stand attracted and therefore the authority to impose GST stands denuded. It is pointed out that this Notification was followed by Circular dated 11.10.2019 wherein the Ministry of Finance has recorded that the said is a special dispensation only for supply of services by way of grant of liquor licences by the State Governments as an agreement between the Centre and States and has no applicabilit....
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.... Seventh Schedule of the Constitution of India, the field of legislation in respect of taxes on mineral rights has been exclusively conferred on the States subject to any limitation imposed by Parliament relating to mineral development. This field of legislation relates back to Article 245 read with Article 246, which confers the source of power for enacting legislation in respect of the fields of legislation enumerated in the Seventh Schedule. The legislative competence to impose GST is however, located in Article 246A and it also contains a non-obstante clause seeking to override the provisions of Article 246. 19. Learned Senior counsel has submitted that conferment of mining licences is essentially an exercise of mineral right and any tax in respect thereof, can be levied only by the State Government and the provisions of Article 246A, notwithstanding the non-obstante clause contained therein, cannot be pressed into service to confer legislative competence on the State and the Centre to impose GST on such transaction. It is submitted that in the MADA judgment several legal issues pertaining to the mining industry were settled by the Hon'ble Supreme Court. Amongst these the expr....
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....e crux of these entries inevitably goes to demonstrate that, the lessor in exercise of its mineral rights (one of them being the right to receive royalty and the other being the transfer of mineral rights) recovers such royalty, by execution of lease agreements in exchange of receipts of such royalty. As such therefore, the substance of the transaction (even though it may be termed as grant of mining rights) is intrinsically exercise of mineral right by lessor while making available such grant. It is submitted that although the pith and substance of the two articulations i.e. right to receive royalty and grant of mineral rights is one and the same and consequently if the jurisdiction to levy tax on mineral right falls exclusively within the domain of State Legislature (Entry 50, List 11 Schedule VII) then the same cannot be said to fall within the jurisdiction of Article 246A to impose GST on a concurrent basis. 21. It is submitted that admittedly Article 246A contains a non-obstante clause which expressly seeks to override the provisions of Article 246. In keeping with this non-obstante clause, a view may emerge that even though power to levy tax on mineral rights may exclusively....
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....aid, however, the entire royalty is not necessarily towards any alleged service. Referring to paragraph '130' of the MADA judgment, it is submitted that their Lordships have held that royalty is a consideration paid by the mining lessee to the lessor for enjoyment of mineral rights and also to compensate for loss of value of minerals suffered by the owner of the minerals. 24. At paragraph '131', their Lordships have held that Section 9 of Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as 'the MMDR Act') statutorily regulates the right of the lessor to receive consideration in form of royalties from the lessee. It is, thus submitted that on perusal of two observations of the Constitution Bench, it may be noticed that the Hon'ble Supreme Court has not said in so many words that royalty is a consideration for rendition of service. Instead, what has been said is that it is a consideration for enjoyment of mineral right, which right of the lessor to receive consideration in the form of royalty is regulated by Section 9 of the MMDR Act. 25. It is submitted that assuming for argument sake that the act that leads to enjoyment of mineral right is a serv....
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.... the Bihar Excise Act, the distinction between regulatory fee and compensatory fee was once again reiterated. 26. It is submitted that power to levy tax under Article 246A is restricted only to supply of goods and services and does not extend to transactions involving loss of mineral, compensation of damages, charges which are regulatory in nature. According to him, power to levy tax is restricted only on the service element. The portion of royalty relatable to enjoyment of mineral right may be a service, whereas, the compensation for loss of minerals read with Section 9 of MMDR Act is a regulatory fee and not fee for services. It is thus submitted that for a valid imposition of tax under Article 265, there should be clarity and certainty in respect to the measure of tax. Relying upon the judgment of the Hon'ble Supreme Court in the case of Govind Saran Ganga Saran v. Commissioner of Sales Tax & Ors. reported at 1985 (Supp) SCC 205 (paragraph '5') it is submitted that in the said judgment it has been held that if the components of taxation (measure of tax, taxable event, rate of tax and the taxable person) are not clearly and definitely ascertainable, it is difficult to say that t....
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.... State of Maharashtra reported in (2000) 6 SCC 12 where the purposes of ascertaining when transfer of right to use any goods (as contemplated under Article 365(29A)(d) takes place, it was observed in paragraph '27' that the transfer of right takes place once a written contract is entered into between the parties and the taxable event would be the execution of contract for the right to use goods. It is submitted that in respect of grant of mineral exploration rights which is manifested by execution of mining lease, the taxable event for transfer of such right would therefore be the date on which the formal contractual arrangement is executed transferring and vesting of such mineral rights from the lessor to the lessee. 28. It is submitted that in the present case, on 21.10.2014, the petitioner was declared as the highest bidder in respect of auction of sand ghats carried out for a five-year period starting 01.01.2015 to 31.12.2019. Vide letter of even date, the same was communicated to the petitioner directing it to pay 25% of the auction amount of Rs. 115.31 crores within seven days for issuance of an in-principle sanction order. The said in-principle sanction order was issued vid....
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....settlement payments made under these agreements cannot be subjected to GST. (b) In respect of those settlement agreements that may have been signed post 01.01.2017, since both the principle sanction orders and the settlement deed for the calendar year 2015 clearly bound down the petitioner with an obligation to pay the settlement amount for the five calendar years clearly indicating the amounts payable for each calendar year, the rights and obligations of the parties stood frozen on that date, which would be in substance the date when the petitioner acquired the right which would have given rise to approaching the writ court for protection of such right. The subsequent execution of the settlement agreements post 01.01.2017 was at best a mere formality since no new rights or obligations were created between the parties. In any case, statutorily in terms of the Rule 7 of the 1972 Rules and Rule 16 of the 2019 Rules, settlement deeds were required for a period of five years thereby clearly laying down the intent of the present statutory contract. It is submitted that upon the end of the settlement deed for the calendar year 2019 while fresh agreements were required to be signed, howev....
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....ecific terms, the Revenue in its appeal memo had contended that the correct service accounting code should be 999113 and if there is any doubt then the correct classification should be 999799. Vide the impugned order dated 10.12.2021, the appellate authority upheld the classification as held by the original authority i.e. 997337. To that extent, such an affirmation was against the appellant revenue's contention. However, in breach of the basic propriety of an appellate authority's jurisdiction, it travelled beyond the scope of appeal by holding that rate of GST payable would be 18% with effect from 01.01.2017 and for that purposes reliance was placed on a circular of the Board dated 06.10.2021 where at paragraph '9.3', the Board had clarified that the intention of the Government has always been to tax the activity at a standard rate of 18%. 31. It is submitted that the appellate authority has recorded an erroneous finding on merits as well as in law. In paragraph '8.2' of the impugned appellate order, the appellate authority holds that the petitioner's case does not involve any assignment of any right to use any natural resources since the activity of the petitioner in no way invo....
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....ciple of res judicata though undoubted is a salutary principle, the said principle however amongst other has some exceptions, for example (i) when judgment is passed is without jurisdiction, (ii) a matter involves pure question of law or (iii) when judgment has been obtained by committing fraud on court. The petitioner also relied upon Constitution Bench judgment in Basheshar Nath vs. Commissioner of Income Tax, Delhi reported in AIR 1959 SC 149 (paragraph '15' and '19'). Reliance has also been placed on the judgment of the Hon'ble Supreme Court in the case of Olga Tellis and Ors. vs. Bombay Municipal Corporation and Ors. reported in (1985) 3 SCC 545 where at paragraph '28' and '29' it has been held that doctrine of acquiesce or waiver cannot apply where the issue involved pertains to violation of Article 14 and 19(1)(g). Submissions on behalf of the State 33. Mr. Vikash Kumar, learned Standing Counsel-11 has opposed the submissions of the learned Senior Counsel for the writ petitioners. Learned counsel has adopted the stand of the State as disclosed in the counter affidavit filed in CWJC No. 18206 of 2023, in all these writ applications. It is submitted that earlier duri....
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....es to have lease of a mining area for undertaking mining operations. The settlement amount being consideration certainly places assignment of right to use natural resources deposited in the leased area as a service as any activity carried out by a person for another for consideration is a service. 35. The stand of the respondent department regarding its taxability is substantiated by the scope of supply under Section 7 of GST Act and scheme of classification of services wherein it is clearly visible that this activity not only comes under the category of service but is also a service taxable at 18%. Learned counsel has referred Section 7 and the scheme of classification which is Annexure 'R/2' to the counter affidavit. 36. Learned counsel submits that on the recommendation of the GST Council, Circular No. 164/20/2021-GST dated 6th October, 2021 has been issued. It has been clarified that even if the rate schedule did not specifically mention the rate of taxation on service by way of grant of mining rights, during the period 01.07.2017 to 31.12.2018, it was taxable at 18% in view of principle laid down in the 14th meeting of the Council for residuary GST rate. Post 1st January, 20....
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....17 iv. As per the annexure appended with the above notification, Leasing services have been classified under entry no.257 under Group No.99733 and sub Heading 997337 which are as follows... v. "Licensing services for the right to use minerals including its exploration and evaluation." vi. Settlement amount paid by the Settlee (of sand ghats) to the government is nothing but an amount paid for getting right to use the minerals granted to it for a specified period as per term of lease. vii. As per above explanation leasing /settlement of Sand Ghats covered at Sr. no. 17 of Notification No. 11/2017 CT (Rate) dt. 28/06/2017. viii. Since description of services under serial no. 17 (i) to vii (a) does not cover such services therefore, it would fall under the residual entry at sr. no. 17(viii). a. Rate of tax on the services classified under entry no. 17 (viii) of the Notification No. 11/2017 CT(Rate) dt. 28/06/2017 is notified as 18% (9% CGST & 9% SGST) [Substituted vide Notification No. 27/2018 dt. 31/12/2018] ix. Liability of such tax is to be discharged by the recipient under Reverse Charge Basis (RCM) if supplier of the service is government. (Ref. Sr.no.5 of Notificat....
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....e Advance Ruling Authority was with regard to the rate and whether the petitioner was rightly discharging its tax liability of royalty paid to the government under 'RCM' at the rate of 5%. 43. It is submitted that the petitioner did not raise any grievance before the appellate authority for advance ruling against the order of the Advance Ruling Authority. It was the Department who had gone to the appellate authority. It would appear from the submissions of the writ petitioner made before the Advance Ruling Authority recorded in the order (Annexure '7') that before the Advance Ruling Authority, the petitioner never contended that the GST would not be payable on the royalty or that they would be entitled for exemption under serial no. 64 of the Notification No. 12/2017 dated 28.06.2017. It is submitted that in the counter affidavit filed before the appellate authority for advance ruling, the petitioner has categorically stated in paragraph '9' of its counter affidavit that "since the classification of the services being received by the respondent is now settled, the dispute in the instant appeal remains only regarding the rate of tax for the disputed period i.e. from 01.07.2017 to 3....
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....ax which they were paying. 46. Learned counsel submits that GST is payable on settlement amount. It is payable with payment of every installment of the settlement amount and in case where royalty on extracted quantity of sand which is more than the settlement amount, then the settlee shall be liable to pay additional settlement amount. The settlement amount is the consideration. Learned counsel submits that from the order of the Advance Ruling Authority, (Annexure '4') it would appear that the petitioner agreed to deposit GST liabilities in accordance with the updated notification. The appellate authority has also upheld the classification in the same category i.e. 997337 but rightly relied upon the GST Council recommendation. The GST Council has been given a constitutional status. In this regard, learned counsel has relied upon the judgment of this Court in case of M/s Barhonia Engicon Private Limited and Ors. vs. The State of Bihar and Ors. (CWJC No. 4180 of 2024). 47. Learned counsel submits that the petitioner has not argued on 'exemption' because the Notification No. 12 of 2017-Central Tax dated 28.06.2017 in (Annexure '14'), service code 64 talks of exemption on tax payable....
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.... minerals. 50. The term 'mineral concession holder/ settlee/ lessee has been defined in Rule 2(xvii) to mean a person holding a valid mineral concession for quarrying sand and other minor minerals from the settled/leasehold areas. Rule 2 (xxvi) defines the term 'settlement' to mean the mining right given on behalf of the government to quarry, win, work and carry away sand and other minor minerals through a competitive bidding process. Rule 11 of the said Rules echoes the same principle as provided in Section 4 of the MMDR Act inasmuch as that no person can undertake any mining operation except under and in accordance with the terms and conditions of the mining lease. Chapter V of the said 2019 Rules provides for the concept of settlement of sand and Rule 29A provides for a mode of settlement through public auction and thereafter issuance of an in-principle sanction order, followed by an issuance of work order. As per Rule 29B(2), the successful bidder is awarded the concession to mine sand for a period of five years and the parties are required to execute a settlement deed in a prescribed statutory format (Form B). Rule 29B(3) provides for the mode of payment of royalty and se....
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....e 254 of the majority decision the said judgment has also been referred thereupon. 53. Learned counsel for the petitioner submits that the contention of the State justifying Notification No. 25/2019 dated 30.09.2019 saying that the recommendations of the GST Council are binding and that on the recommendation of the Council the services by way of grant of alcoholic liquor license was held to be neither supply of goods nor supply of service is unfounded and the same is to be rejected. It is contended that if the recommendations of the GST council was the be-all and end-all for a particular tax dispensation, it would mean that the GST Council, a Constitutional body created under Article 279A, is immune to rigors of Part III of the Constitution and thus exercises an extra-constitutional authority sitting above the Constitution. Such a position cannot be countenanced by any means when it is well known that no authority howsoever high is above the rule of law. 54. As regards the submission of the State with respect to serial no. 64 of the Notification No. 12/2017 dated 28.06.2017, it is submitted on behalf of the petitioner that the Entry 64 read with the proviso contained therein prov....
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.... 97 permits filing of an application for obtaining advance ruling, stating the question as enumerated under Sub-Section (2) of Section 97 on which advance ruling is sought. The scope and ambit of Section 97 may be appreciated on going through the said Section which we quote hereunder:- "97. Application for advance ruling. (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought. (2) The question on which the advance ruling is sought under this Act, shall be in respect of,-- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amount....
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....te) dated 28.06.2017 has been referred. The annexure attached to the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 has defined the Service Accounting Code for each type of services. After meticulous observation of the above mentioned service accounting codes, it has been found that the nature of service received by the application is covered under the Service Accounting Code 9073 37- "licensing services for the right to use minerals including its explorations and evaluation. The Government has been providing the service of licensing services for the right to use minerals after its exploration and evaluation to the applicant and the applicant has to pay a consideration in the form of rent/ royalty to the Government of Bihar for the same. 12.5. The applicability of GST rate for the aforementioned service is based on the classification of service. In the present case, the mining rights so granted are covered under the sub-heading 9973 37 that specifies - Licensing services for the right to use minerals including its exploration and evaluation. We have gone through the notification no. 11/2017 dated 28-6-2017 and the amendments made there under time to time particularl....
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....7-Central Tax (Rate) dated 13.10.2017, Notification No.1/2018-Central Tax (Rate) Central Tax (Rate) dated 25.01.2018 and Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. iii) for a declaration that classification of mining activity in the nature of licensing services for the right to use minerals including its exploration and evaluation taxable at the rate of 9% CGST and 9% BGST with effect from 01.01.2019 under the residual entries of serial no. 17 of the Notification No. 11/2017, Central Tax dated 28.06.2017 as amended by Notification No. 27/2018 dated 31.12.2018 Central Tax (Rate) dated 31.12.2018 would only fall under the inverted duty structure and consequently, would be refundable and that levy of tax at higher rates on like goods would be constitutionally imperssible. iv) for granting any other relief (s) to which the petitioner is otherwise found entitled to." 64. When the writ application was taken up for consideration, the Hon'ble Court was informed by learned Standing Counsel for the State that the appellate authority under the provisions of the BGST Act, 2017 stands constituted. The writ application was disposed of in the following terms:- "Shri Vika....
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....quired and desired; (m) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law; (n) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with a reasonable dispatch; (o) We have not expressed any opinion on merits and all issues are left open; (p) If possible, proceedings during the time of current Pandemic [Covid-19] be conducted through digital mode; The instant petition sands disposed of in the aforesaid terms. Interlocutory Application(s), if any, also stands disposed of. Learned counsel for the respondents undertakes to communicate the order to the appropriate authority through electronic mode" No Appeal Preferred by the Petitioner(s) 65. It is an admitted position that the petitioners did not approach the appellate authority for advance ruling. It was the Department through the Joint Commissioner, State Tax who preferred an appeal giving rise to case No. AAAR/01/2021-22. The Department was aggrieved by the order dated 29.09.2020 passed by the Advance Ruling Authority to the extent th....
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.... not raised before the Advance Ruling Authority in the application filed under Section 19 of the SGST/BGST Act, 2017. 68. This Court further finds that another issue which was in the counter affidavit by way of submission is with regard to the exemption under serial no. 64 of the Notification No. 12 of 2017 dated 28.06.2017. The said notification has been issued by the Government of India in the Ministry of Finance (Department of Revenue), in exercise of power conferred by sub-section (3) and sub-section (4) of Section 9, sub-section (1) of Section 11, sub-section (5) of Section 15 and Section 148 of the CGST Act, 2017. The preamble of the notification states as follows:- "...the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject ....
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....otification No.31/2017-Central Tax (Rate) dated 13.10.2017 Notification No.1/2018-Central Tax (Rate) Central Tax (Rate) dated 25.01.2018 and Notification No. 27/2018-Central Tax (Rate) dated 31.12.2018. Shift of Stand of the Petitioner 71. It is evident that while the petitioner did not challenge the entire order of the Advance Ruling Authority in the writ petition, even as they did not prefer any appeal before the appellate authority for the advance ruling against the said order, when it came to file a counter affidavit in the appeal preferred by the Department, they raised two issues beyond the scope of Appeal which we have taken note of hereinabove. The tentative kind of approach of the respondent M/s 'BSCPL' may be seen from the kind of prayer made in paragraph '35' of their counter affidavit before the appellate authority. There, they prayed for setting aside the order of the Advance Ruling Authority as it is bad in law. Contrary to the said prayer in the counter affidavit filed before the appellate authority, in this Court a submission has been made in alternative that in case this Court is not persuaded with the proposition enumerated in paragraph 'A' to 'D', then the impu....
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....ility under head 9973. Royalty is not a Statutory Impost/Tax -- MADA Judgment 74. We further find that when the present writ application was filed, the petitioner prayed for various reliefs. They went on to seek declaration that royalty being in the nature of statutory impost is a tax and, therefore, the same cannot be exigible to further taxation (paragraph no. 1 (iv)). The petitioner further sought a declaration that the grant of mineral concession is merely a statutory function/ duty under provisions of law, it does not amount to rendition of any service, therefore, the same does not attract the levy of GST. We have taken note of the arguments formulated by learned Senior Counsel under paragraph '15' of our judgment. We are of the opinion that most of the arguments which have been convassed by learned Senior Counsel for the petitioners were already discussed and have been answered by the Hon'ble Supreme Court in MADA judgement. While dealing with the issues as to whether royalty is in the nature of a tax?, in paragraph '130', their lordship held as under:- "130. On first principles, royalty is a consideration paid by a mining lessee to the lessor for enjoyment of mineral rig....
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....ii) the liability to pay dead rent flows from the terms of the mining lease; (iii) dead rent is an alternate to royalty; if the rates of royalty are higher than dead rent, the lessee is required to pay the former and not the latter; and (iv) the Central Government prescribes the dead rent not in the exercise of its sovereign right, but as a regulatory measure to ensure uniformity of rates. It has been clearly held that both royalty and dead rent do not fulfil the characteristic of tax or impost. 78. As regards the transfer of mineral rights to the lessee, the Hon'ble Supreme Court has held in paragraphs '340', '341', '342', '343' and '344' as under:- "340. A mining lease contemplated under the MMDR Act relates to the mining rights and mineral rights. It does not grant surface rights to the mining lessee. However, surface rights are essential to begin any mining operations. In fact, obtaining of the surface rights by a mining lessee over the area where mining operations will be conducted is a prerequisite condition for grant of both a prospecting licence as well as a mining lease. The lessee requires access to the surface rights to effectively exercise their mining rights an....
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....st in the minerals is transferred under a mining lease, the lessee acquires the right to work the mine and win the minerals. It is through this process of working the mine and winning of minerals that minerals are extracted or obtained from the earth irrespective of whether such activity is carried out on the surface or in the bowels of the earth. [Tarkeshwar Sio Thakur Jiu Case, (1979) 3 SCC 106, para 15]. Although the title to minerals vests in the State Government, the mining lease transfers the interest in the mineral from the State Government to the mining lessee. During the whole process, the minerals continue to remain embedded in the earth, either over or above. Thus, there is no decoupling of minerals from land. It is well established that tax on land can also be imposed on an occupier. When a mining lease is granted, the lease holder necessarily has to occupy the surface rights of the area specified in the lease. Resultantly, the leaseholder has rights to both the minerals and surface during the subsistence of the mining lease. 344. We do not agree with the respondent's submission that the mineral rights are transferred from the State to the mining lessee only upon th....
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....ere executed and there were agreements that were executed post 01.07.2017, however, those executions according to the petitioner were a mere formality. We find no merit in this submission. Learned Senior Counsel for the State has rightly submitted that the GST is payable on the payment of every installment of the settlement amount and in case where royalty on extracted quantity of sand is more than the settlement amount, then the settlee shall be liable to pay additional settlement amount. In view of the judgment of the Hon'ble Supreme Court, there is no iota of doubt that the transfer of interest in minerals is distinct from the exercise of minerals rights and the royalty is required to be paid only upon exercise of the mineral rights by the lessee. Entry 50 of List II under Seventh Schedule, Article-246A of the Constitution of India 80. We further find that while discussing the measure to determine the tax, the Hon'ble Supreme Court has discussed Entry 49 and 50 of List II under Seventh Schedule of the Constitution of India. It has been held that both the Entries operate in different fields without any overlap. The nature of tax under both the Entries i.e. Entry 49 and 50 of Li....
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....arliament can impose "any limitations" on the legislative field created by that entry under a law relating to mineral development. The MMDR Act as it stands has not imposed any limitations as envisaged in List II Entry 50; 365.4. The scope of the expression "any limitations" under List II Entry 50 is wide enough to include the imposition of restrictions, conditions, principles, as well as a prohibition; 365.5. The State legislatures have legislative competence under Article 246 read with List II Entry 49 to tax lands which comprise of mines and quarries. Mineral-bearing land falls within the description of "lands" under List II Entry 49; 365.6. The yield of mineral-bearing land, in terms of the quantity of mineral produced or the royalty, can be used as a measure to tax the land under List II Entry 49. The decision in Goodricke [Goodricke Group Ltd. v. State of W.B., 1995 Supp (1) SCC 707] is clarified to this extent; 365.7. List II Entries 49 and 50 deal with distinct subject-matters and operate in different fields. Mineral value or mineral produce can be used as a measure to impose a tax on lands under List II Entry 49; 365.8. The "limitations" imposed by Parliament in ....
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....he course of inter-State trade or commerce." 83. At the same time, Article 246-A has also been inserted which is quoted hereunder:- "246-A. Special provision with respect to goods and services tax.-(1) Notwithstanding anything contained in articles 246 and 254, Parliament, and, subject to clause (2), the Legislature of every State, have power to make laws with respect to goods and services tax imposed by the Union or by such State. (2) Parliament has exclusive power to make laws with respect to goods and services tax where the supply of goods, or of services, or both takes place in the course of inter-State trade or commerce. Explanation.-The provisions of this article, shall, in respect of goods and services tax referred to in clause (5) of article 279-A, take effect from the date recommended by the Goods and Services Tax Council." 84. In the above background, the Parliament enacted the Central Goods and Services Tax Act, 2017. The preamble of the Act reads as under:- "An Act to make a provision for levy and collection of tax on intra-State supply of goods or services or both by the Central Government and for matters connected therewith or incidental thereto. BE it enact....
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....word "State Tax" has been defined under Section 2 clause (104) which means the tax levied under any State Goods and Services Tax Act. 89. Section 7 of the CGST/BGST Act, 2017 talks of scope of "supply". Clause (a) of Sub-Section (1) of Section 7 includes all forms of supply of goods or services including licence, rental and lease for consideration within the expression "supply". It is, therefore, evident that leasing of mines and grant of mineral rights to a lessee for consideration comes within the meaning of supply of services. 90. Before the Appellate Authority for advance ruling, one of the arguments raised on behalf of the petitioner was with regard to his claim for exemption under Serial No. '64' of the Exemption Notification No. 12/2017. While arguing the writ application, learned Senior Counsel has not specifically argued this point. Classification of Services - Notification No. 11/2017-Central Tax (Rate); 27/2018-Central Tax (Rate) dated 31.12.2018 and Circular No. 164/2021 dated 06.10.2021-discussed 91. Now, we would firstly deal with Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 which has been issued by the Central Government on recommendations of the ....
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....ication of the Government of India, in the Ministry of Finance (Department of Revenue) No. 11/2017-Central Tax (Rate) dated 28th June, 2017. One of the amendments were brought against Serial No. 17 for Item No. VIII in Column (3) and the entries relating thereto in Column '3', '4' and '5'. The following were substituted:- "(e) against serial number 17, for item (viii) in column (3) and the entries relating thereto in columns (3), (4) and (5), the following shall be substituted, namely ;- (3) (4) (5) "(viia) Leasing or renting of goods Same rate of central tax as applicable on supply of like goods involving transfer of title in goods - (viii) Leasing or rental services, with or without operator, other than (i), (ii),(iii), (iv), (v), (vi), (vii), and (viia) above 9 - 94. In view of the aforementioned notifications, the Advance Ruling Authority held in the original order that the activity undertaken by the applicant attracts 5% GST (2.5% CGST + 2.5% SGST) up to 31.12.2018 and taxable at the rate of 18% (9% CGST + 9% SGST) from 01.01.2019 onwards under the residual Entries of serial no. 17 of Notification No. 11/2017 dated 28.06.2017 as amended vide Notification No. 27/....
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....ncil while recommeding the rate schedule for services (5%, 12%, 18% and 28%) specifically recommeded that all the residuary services would attract GST at the rate of 18%. In these circumstances, in our opinion, the Appellate Authority on advance ruling has not committed any error taking a view with regard to the rate of tax for the period 01.07.2017 to 31.12.2018 at the rate of 18% (9% CGST + 9% SGST). Claim of Exemption Rightly Negatived by the Appellate Authority 98. As regards the exemption claimed under serial no. 64 of the Notification No. 12 of 2017, the Appellate Authority for advance ruling has rightly taken a view that the said exemption would not be available to M/S BSCPL. Paragraph '9.1' of the impugned appellate order provides the reason which we quote underunder for a ready reference:- "9.1 Before, parting with the issue it is also being clarified that the expression "... where such right to use was assigned by the Central Government, State Government, Union Territory or local authority before the 1st April, 2016:... "occurring in the said serial number 64 of the impugned notification number 12/2017 (supra) also does not come to the rescue of the Respondent on fact....
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.... Supreme Court in MADA case. The judgment makes it very clear that royalty is a consideration paid by a mining lessee to the lessor for enjoyment of mineral rights and to compensate for the loss of value of minerals suffered by the owner of the minerals. It arises out of the contractual condition of the mining lease. 103. One of the submissions made by learned Senior Counsel for the petitioner is that there is a discrimination on the part of Government in the matter of levy of tax on royalty in case of exercise of mineral rights. It is submitted that the liquor licenses are not treated as supply of goods and services. It would appear that Notification No. 25/2019 - Central Tax (Rate) dated 30.09.2019 declares that services by way of grant of alcoholic liquor license, against consideration in the form of licence fee or application fee or whatever name called is to be treated neither as supply of goods nor as supply of services. The notification explains that the same has been issued to implement the recommendations of the 26th GST Council meeting where it has been recommeded that no GST shall be leviable on licence fee/application fee of the aforesaid nature. In his submissions, Mr....
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....it is conceded by the respondent that the Act uses the word 'fee' indiscriminately. It is admitted that some of the levies authorised are taxes though called fees. Thus, for example, as Mitter J. pointed out, the levies authorised by Ss. 218, 222 and 229 are really taxes though called fees, for no services are required to be rendered in respect of them. This Act, therefore, did not intend to use the word fee as referring only to a levy in return for services. 14. The nature of services to be rendered in return for a levy so as to make it a fee has been considered by this Court in several cases and in all of them it has been said that the services must confer some benefit on the person paying the fee. The earliest case on the subject appears to be Commissioner, Hindu Religious Endowments, Madras v. Sri Lakshmindra Thirtha Swamiar of Sri Shirur Mutt, 1954 SCR 1005 : (AIR 1954 SC 282) where it was said at page 1042 (of SCR) : (at p. 295 of AIR) "a fee is a payment for a special benefit or privilege. Public interest seems to be at the basis of all impositions, but in a fee it is some special benefit which the individual receives". It was again said at p. 1043 (of SCR) : (at p. 296 of....
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....r expedient for providing amenities like communication, water supply and electricity for the better development of the mining area and to meet the welfare of the labour employed and other persons residing or working in the area of the mines. Here again there is no element of control but the services resulted in real benefit specially accruing to the persons on whom the levy was imposed. These decisions of this Court clearly establish that in order to make a levy a fee for services rendered the levy must confer special benefit on the persons on whom it is imposed. No case has been brought to our notice in which it has been held that a mere control exercised on the activities of the persons on whom the levy is imposed so as to make these activities more onerous is service rendered to them making the levy a fee." 104. Notification No. 12 of 2017 imposes tax on the services covered under Head 99733. In the garb of a challenge to the order of Appellate Authority for Advance Ruling, this Court would not allow the petitioners to contend that imposition of tax under head 99733 in the Notification No. 12 of 2017 is discriminatory for the reason that the licence to alcohol industry has been....
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.... Limited versus State of Tamil Nadu reported in (1990) 1 SCC 12 and other judgments of the Hon'ble Supreme Court the classification of service is illegal and without jurisdiction. 111. In the writ application, the petitioner has raised issue as to whether royalty determined under Section 9/15 (3) of the MMDR Act, 1957 is in the nature of Tax? The other issues raised by the petitioner is as to what is true nature of royalty/ dead rent payable on minerals produced/ mined/ extracted from mines. Scope of expression "Taxes" on mineral rights in List II of Entry 50 of the Seventh Schedule to the Constitution and other related issues have been raised. One of the issues raised in the writ application is that the order of the respondent no. 2 as also respondent no. 3 is without the digital signature which is contrary to Rule 26(3) of the Rules, therefore, it would be void ab-initio. 112. A counter affidavit has been filed on behalf of respondent no. 2 and 3. It is stated that the royalty is paid to the lessor by way of a consideration for providing right to lease to exploit sand from river land. Hence, in terms of Section 15 of the BGST/CGST Act, 2017, royalty paid to the lessor is the va....
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....petitioner by uploading it on GSTBO portal but no response to the said show-cause was filed by the petitioner. In these circumstances, an order dated 02.02.2021 levying tax, interest and penalty under Section 73(9) of the BGST/CGST Act has been passed against the petitioner. 115. Learned counsel for the respondents submits that in MADA case, it has already been held by nine judges' Bench decision of 8:1 that Royalty is not in the nature of a tax. It is submitted that validity of levy of GST on royalty of lease of mines was challenged in the Hon'ble Supreme Court in Writ Petition (Civil) bearing No. 1076 of 2021 M/s Lakhwinder Singh versus Union of India and Others. The said writ petition has already been dismissed vide order dated 04.01.2022. In SLP (C) No. 3726 of 2017 i.e. Udaipur Chambers of Commerce and Industry & Others versus Union of India and Others has passed the following order:- "i. We are not inclined to entertain the petitions under Article 32 of the Constitution in the first instance before this Court. The petitioners have an alternate and efficacious remedy of moving the concerned High Courts under Article 226 of the Constitution. ii. The petitioners are accordi....
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....07 and a demand of Rs. 44,64,314/- has been raised against the petitioner. (iv) For restraining the respondent authorities for issuance of DRC-13 and initiating recovery proceeding for recovery of the tax amount through the Bank Account Attachement. (v) For issuance of an appropriate Writ(s), order(s), and/or directions(s), as Your Lordships may deem fit and proper in the facts and circumstances of this case in the interest of justice." 120. The petitioner has raised a question as to whether the royalty is in the nature of tax? According to the petitioner, royalty cannot be considered as consideration and, therefore, GST is not leviable on said royalty. It has also been stated in the writ petition that the issue is sub-judiced before Nine-Judges' Bench of the Hon'ble Supreme Court in MADA case. 121. This Court finds that the issue which has been raised by the petitioner has already been answered in the MADA judgment of the Hon'ble Supreme Court. We have already dealt with those issues in the case of M/s BSCPL. No other issue has been raised by learned counsel for the petitioner. 122. We, therefore, do not find any reason to interfer with the impugned orders and the demand no....
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.... 125. According to the petitioner, he had participated in the tender for two sand ghats, namely, BHOJ-SON-33 and BHOJ-SON 37. The petitioner was found the highest bidder and he was communicated about the acceptance of his tender. In para '2' of letter of acceptance (LoA) dated 18.01.2023, the schedule of payment of settlement amount has been provided. In para '3' of the 'LoA', it is stated that GST is to be paid as per the prevailing rate to the respondent Commercial Taxes Department and that the petitioner will have to submit the proof of payment of GST along with each installment. 126. The bone of contention in the present writ application is the taxablity on the amount of royalty/settlement amount. The petitioner has questioned the communication made by the Mining Authorities wherein it has been specifically stated that GST @ 18 % shall be levied on royalty with respect to the sand and permission for mining would only be granted after payment of GST on the royalties on sand by the petitioner. The communication of the Mininy Authority, it is stated, is based on the order dated 10.12.2021 passed in CASe No. AAAR/01/2021 by the Appellate Authority for advance ruling, Bihar. 127.....
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.... said government department and therefore no GST is leviable against the same; (e) For further holding and a declaration that the issue that no service tax is payable on the royalty paid against the grant of mining rights is sub-judice before the Honourable apex court in the matter of Udaipur Chamber of Commerce and Industry and Others Versus The Union of India and others. (Special Leave To Appeal Number-37326 of 2017) wherein an interim order dated 11.01.2018 restraining the recovery of service tax on royalty has been passed by the Honourable apex court; (f) For further holding and a declaration that the respondents ought to await the verdict of the Honourable apex court on the issue of the true nature of royalty paid by the petitioner being a tax or a consideration against grant of mining rights by the state government which is pending in consideration before the Constitution bench of 9 Honourable Judges in the matter of Mineral Area Development Authority And Others Versus Steel Authority Of India And Others (Civil Appeal Number 4056 - 64 Of 1999 And Other Analogous Cases); (g) For grant of any other relief or reliefs to which the petitioner is found entitled to in the fact....
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....i) This Hon'ble Court may further adjudicate and hold that the services provided by the State of Bihar to the petitioner by way of grant of mineral concession for winning sand is not liable for GST, as it is not a consideration paid against any licensing services. iv) This Hon'ble Court may further adjudicate and hold that the royalty being in the nature of statutory impost, is a tax and therefore the same cannot be exigible to further taxation. v) This Hon'ble Court may adjudicate and hold that grant of mineral concession is merely a statutory function/duty under the provisions of law and does not amount to rendition of any service, so as to attract goods and service tax. vi) For a further direction to the respondent authorities not to precipitate the matter in view of pendency of similar issue in the matter of Udaipur Chamber of Commerce & Industry and others Vs. The Union of India and others, wherein the Hon'ble Apex Court has restrained the authorities from recovering service tax on royalty. vii) For a direction to the respondent authorities to await the verdict of the Hon'ble Apex Court on the issue as to whether royalty paid by the petitioner is a ....
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....t has held and declared that royalty is not in the nature of tax and tax may be imposed on royalty. We have already discussed all these issues in our judgment in the case of M/s BSCPL, hereinabove. 137. No other issue has been raised before us. 138. In the circumstances, we find no merit in the writ applications. Both the writ applications are hereby dismissed. CWJC No. 4562 of 2024 139. In this writ application, the petitioner has prayed for the following reliefs:- "i) To issue an appropriate writ, order or direction in the nature of mandamus commanding the Respondents to refund the amount of Rs. 1,48,22,500/- paid by the petitioner, under compulsion as Goods and Service Tax at the rate of 18% on the royalty of Rs. 8,23,50,000/- paid to the Department of Mines & Geology, Government of Bihar, as first installment for settlement of Sand Block for Sone Cluster 16 in the District of Bhojpur, over river Sone. ii) To issue an appropriate writ, order or direction in the nature of mandamus commanding the Respondents not to levy and claim GST on the second and third installment of royalty for settlement of Sand Block for Sone Cluster 16 in the District of Bhojpur, over river Sone. ....
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.... grievance of the petitioner is that once the royalty is collected by the Government on the basis of determination and fixation keeping in view the parameters relevant for the purpose, it can only be said to be consideration paid against the grant of mining right to lease holder. This petitioner has also contended in the writ petition that the royalty is in the nature of a tax collected by the Government in exercise of Statutory powers under the MMDR Act, 1957 and Rules of 2019 and as such there cannot be any tax on royalty. In the writ petition, he contended that imposition of GST upon royalty paid by the petitioner is violative of Article 265 of the Constitution of India, as the respondent authority have no jurisdiction and authority under the law to impose royalty of GST. 142. At the time of filing of the writ petition, the petitioner pointed out the judgment of the Hon'ble Supreme Court in case of India Cement (supra) which was doubted in the case of Kesoram (supra) and the issue has been referred to a larger Bench in MADA case. Learned counsel for the petitioner is now aware of the judgment of the Hon'ble Supreme Court in 'MADA' case. Royalty is not in the nature of tax and t....