Case Law Details
P. Saravanan Vs State Tax Officer (Madras High Court)
The case of P. Saravanan Vs State Tax Officer before the Madras High Court revolves around the applicability of GST on mining lease payments made to the government. In the writ petition, the petitioner contested the imposition of GST on the amount paid for the mining lease. Citing Notification No.13/2017 – Central Tax (Rate), which excludes GST on services provided by government bodies such as renting immovable property to business entities, the petitioner argued for exemption.
The petitioner also relied on interim orders by the Supreme Court, particularly in SLP(C) No.37326 of 2017, where a stay was granted not only on royalty but also on the GST pertaining to mining leases. The mention of a pending nine-judge bench hearing further underscored the complexity and significance of the issue.
Drawing attention to a Division Bench Judgment, the counsel highlighted relevant cases like Venkatachalam v. Assistant Commissioner (ST), Palladam. This batch of cases provided additional context, shaping the legal landscape surrounding GST on mining activities.
In response, Mrs. K. Vasanthamala, learned Government Advocate, acknowledged the petitioner’s stance. The Division Bench of the Madras High Court issued specific directions, emphasizing the submission of objections within four weeks concerning show cause notices related to GST on mining leases.
Crucially, the court mandated that adjudication orders be withheld until the Supreme Court’s nine-judge bench resolved the underlying royalty issue. This directive aimed to prevent premature GST recovery on royalty payments pending a final decision. By deferring adjudication until the Supreme Court clarifies royalty-related matters, the Madras High Court has ensured a fair and considered approach to resolving contentious issues under GST law.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In this writ petition, the petitioner has assailed the impugned order levying GST in respect of the mining lease amount paid by the petitioner to the Government.
2. Learned counsel for the petitioner relies on Notification No.13/2017 – Central Tax (Rate) insofar as the claim relates to GST on mining lease and points out that services supplied by the Central, State Government or local authority to a business entity by way of renting of immovable property is excluded from GST. Reliance is also placed on interim orders issued by the Hon’ble Supreme Court in a batch of cases, including SLP(C) No.37326 of 2017 to contend that the Supreme Court has granted an interim stay not only in respect of royalty but also in respect of mining lease. It is stated that the nine judge bench is scheduled to hear the batch of cases.
3. Learned counsel further placed for consideration the Division Bench Judgment in a batch of cases where the lead case is Venkatachalam v. Assistant Commissioner (ST), Palladam, in W.P.No.30974 of 2022.
4. Mrs. K. Vasanthamala, learned Government Advocate, accepts notice for the respondent.
5. 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.”
6. In view of the said judgment, this petition is liable to be disposed of on the same terms. Consequently, in this case, 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.
7. W. P.No.16624 of 2024 is disposed of on the above terms. No costs. Consequently, connected miscellaneous petitions are closed.
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