Madras HC: Respond to GST Liability on Seigniorage Fee Intimation

Tvl. AVS Tech Building Solutions Vs Deputy State Tax Officer (Madras High Court)

The Madras High Court recently addressed the issue of GST liability concerning seigniorage fees paid by a petitioner to the government. The petitioner challenged the intimation regarding GST liability under applicable laws concerning seigniorage fees. Citing a Division Bench Judgment, the court directed the petitioner to submit objections or representations within four weeks. The court emphasized the importance of affording a reasonable opportunity for a hearing before adjudication. Notably, the court ordered the adjudication to be suspended until a Nine Judge Constitution Bench resolves the nature of royalty. Until then, no GST recovery on royalty was allowed. The judgment clarified avenues for redressal and left all contentions open for future proceedings.

In light of the Madras High Court’s directive, petitioners must respond to GST liability on seigniorage fee intimation within four weeks.

FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT

In these writ petitions, the petitioner has assailed the intimation communicating the GST liability under applicable GST laws in respect of seigniorage fee paid by the petitioner to the Government.

2. Learned counsel placed for consideration the Division Bench Judgment in a batch of cases where the lead case is A. Venkatachalam v. Assistant Commissioner (ST), Palladam, in W.P.No.30974 of 2022.

3. Mr. C. Harsha Raj, learned Additional Government Pleader, accepts notice for the respondent.

4. The Division Bench of this Court issued the following directions at paragraph 9 of the judgment:

“9. In these circumstances, we deem it fit and appropriate to issue the following directions:

(i) In the cases, where the challenge is made to the show cause notices, the writ petitioners shall submit their objections / representations within a period of four weeks from the date of receipt of a copy of this order.

(ii) Upon receipt of the objections / representations from the writ petitioners, the authority concerned shall proceed with the adjudication, on merits and in accordance with law, after affording reasonable opportunity of being heard to the petitioners. However, the orders of adjudication shall be kept in abeyance until the Nine Judge Constitution Bench decides the issue as to the nature of royalty.

(iii) It is made clear that there shall be no recovery of GST on royalty until the Nine Judge Constitution Bench takes a decision.

(iv) Needless to state that on the matters being decided, the writ petitioners if still aggrieved, shall redress their grievance(s), if any, before the appropriate forum, including by filing appeal(s).

(v) Insofar as the challenge to the notification as well as the circular, it is open to the writ petitioners to act upon, after the outcome of the case pending before the Nine Judge Constitution Bench.

(vi) It is also made clear that all the contentions are left open for the writ petitioners to raise in appropriate proceedings, after the outcome of the decision of the Nine Judge Constitution Bench.”

5. In view of the said judgment, these petitions are liable to be disposed of on the same terms. Consequently, in these cases, the petitioner is permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order.

6. W.P.Nos.10158 & 10162 of 2024 are disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.