HC granted interim relief from payment of GST for grant of mining lease/royalty 

Ratan Black Stone Vs Union of India (Jharkhand High Court)

Learned counsel for the Respondents submits that earlier, this Court have been pleased to grant stay of recovery of service tax for grant of mining lease / royalty from the petitioners covered under the interim order dated 02.03.2021 passed in the batch of writ petitions led by WPT No. 3878/2020, though interim protection so far as levy of CGST/JGST is concerned, was refused. Learned counsel for the Respondents however do not dispute that the Apex Court has been pleased to grant stay on payment of GST for grant of mining lease/royalty in the case of similarly situated persons.

On consideration of the materials on record placed by the parties and in view of interim protection granted by the Apex Court in Writ Petition (Civil) No. 1076/2021 in the case of M/s Lakhwinder Singh Versus Union of India & others and, that the petitioners herein, lessee of minor mineral, also raised similar issues of levy of GST on royalty and District Mineral Fund Contribution, we deem it proper to grant similar interim relief (s) to the petitioners herein. Accordingly, until further orders, payment of GST for grant of mining lease/royalty by the petitioners, shall remain stayed.

FULL TEXT OF THE JUDGMENT/ORDER OF JHARKHAND HIGH COURT

All the writ petitions are tagged together as common issues relating to levy of goods and service tax under Reverse Charge Mechanism on the amount of Royalty and District Mineral Fund Contribution paid by them to the State of Jharkhand in respect of minor mineral lease are involved in all the writ petitions.

In WPT No. 4609/2021, petitioner is seeking declaration that no GST is leviable on the amount of Royalty and District Mineral Fund Contribution paid by him to the State of Jharkhand. Apart from this, petitioner has also sought quashing of the notice bearing no. 7241 dated 09.10.2020 issued by the Respondent No. 2 to the extent that the Respondents have held that there is liability towards payment of GST under Reverse Charge Mechanism for the period July 2017 to March 2020 on the amount of Royalty and District Mineral Fund Contribution paid by the petitioner to the State of Jharkhand in respect of mining lease of stone boulders executed in favour of the petitioner by the State of Jharkhand.

In WPT No. 4654/2021, same relief has been prayed for by the petitioner and notice bearing no. 1958 dated 02.12.2020 issued by the Respondent No. 2 (Annexure-1) for payment of GST under Reverse Charge Mechanism for the period July 2017 to March 2020 on the amount of Royalty and District Mineral Fund Contribution paid by the petitioner to the State of Jharkhand in respect of mining lease of stone boulders executed in his favour by the State of Jharkhand is under challenge.

In WPT No. 4678/2021, petitioner who is lessee of minor mineral stone boulder executed by the State of Jharkhand in his favour, has made similar prayer to quash the notice bearing no. 222 dated 24.11.2020 (Annexure-1) issued by the Respondent No. 1 to the same effect.

In WPT No. 4684/2021, petitioner has sought declaration in similar manner that no GST is leviable on the amount of Royalty and District Mineral Fund Contribution paid by him to the State of Jharkhand against the mining lease of stone boulders executed in his favour by the State of Jharkhand. However, no such notice has been issued in his case till date.

In WPT No. 4864/2021, petitioner who is also lessee of minor mineral stone boulder executed in his favour by the State of Jharkhand, has prayed for similar relief (s) as in the other writ petitions besides challenging the notice bearing no. 187 dated 21.11.2020 (Annexure-3) issued by the Respondent No. 2 holding that the petitioner is liable to make payment of GST under Reverse Charge Mechanism for the period July 2017 to March 2020 on the amount of Royalty and District Mineral Fund Contribution paid by him to the State of Jharkhand.

2. Learned counsel for the petitioners has referred to the order dated 02.03.2021 passed in the batch of writ petitions led by WPT No. 3878/2020. This court upon consideration of the pleadings on record and rival submission of the parties, had stayed the recovery of service tax for grant of mining lease / royalty from the petitioners. Operative portion of the interim order dated 02.03.2020 is quoted hereunder:

14. Other High Courts have passed more or less similar interim orders relating to payment of service tax on royalty as noticed hereinabove. The High Court of Bombay at Goa vide interim order dated 22.08.2017, has stayed the imposition of service tax on royalty, but at the same time clarified that it would not come in the way of the revenue for conducting and completing its assessment and enquiry.

15. Having regard to the legal issues raised in respect of the levy of service tax on royalty in the respective writ petitions, we are inclined to pass similar interim order in respect thereof. While the revenue is not restrained from conducting and completing the assessment proceedings, until further orders recovery of service tax for grant of mining lease/royalty from the petitioners shall remain stayed. However, we are not satisfied at this stage that any case for granting interim protection is made out so far as the levy of CGST and/or JGST is concerned.

3. It is submitted by the learned counsel for the petitioners that this court had however refused to grant interim protection, so far as levy of CGST and/or JGST is concerned. Learned counsel for the petitioners therein had approached the Hon’ble Supreme Court of India against refusal of interim protection, so far as levy of CGST on the payment of royalty and District Mineral Fund Contribution is concerned. Learned counsel for the petitioners further submits that those Special Leave Petitions have been permitted to be withdrawn vide order dated 03.01.2022 passed by the Hon’ble Court in Special Leave to Appeal (C) No (s). 19196-19200 of 2021 as the petitioners proposed to avail the remedy available to them under law. It is submitted that the same issue of levy of GST on royalty and District Mineral Fund Contribution had cropped up in Writ Petition (Civil) No. 1076/2021 in the case of M/s Lakhwinder Singh Versus Union of India & others. The Apex Court has, vide order dated 04.10.2021 (Annexure-3), stayed the payment of GST for grant of mining lease/royalty by the petitioner till further orders. Learned counsel for the petitioners submits that in view of the interim order dated 04.10.2021 passed by the Apex Court in Writ Petition (Civil) No. 1076/2021, petitioners such as Baba Projects Private Limited [petitioner in WPT No. 185/2021] and others have withdrawn Special Leave Petitions to seek remedy before this Court. It is submitted that in such circumstances, this Court may be pleased to allow interim protection from recovery of GST on the royalty and District Mineral Fund Contribution paid by the petitioners.

4. Learned counsel for the Respondents submits that earlier, this Court have been pleased to grant stay of recovery of service tax for grant of mining lease / royalty from the petitioners covered under the interim order dated 02.03.2021 passed in the batch of writ petitions led by WPT No. 3878/2020, though interim protection so far as levy of CGST/JGST is concerned, was refused. Learned counsel for the Respondents however do not dispute that the Apex Court has been pleased to grant stay on payment of GST for grant of mining lease/royalty in the case of similarly situated persons.

5. On consideration of the materials on record placed by the parties and in view of interim protection granted by the Apex Court in Writ Petition (Civil) No. 1076/2021 in the case of M/s Lakhwinder Singh Versus Union of India & others and, that the petitioners herein, lessee of minor mineral, also raised similar issues of levy of GST on royalty and District Mineral Fund Contribution, we deem it proper to grant similar interim relief (s) to the petitioners herein. Accordingly, until further orders, payment of GST for grant of mining lease/royalty by the petitioners, shall remain stayed.

6. Learned counsel for the Respondent CGST and State of Jharkhand are allowed three weeks’ time to file counter affidavit in the matter. One week time thereafter is allowed to the learned counsel for the petitioners to file reply, if so advised.

7. Let these writ petitions be tagged along with W.P. (T) No. 3878/2020 where similar issues are involved and be listed accordingly.