Case Law Details
C. Srinivasa Moorthy Vs Deputy State Tax Officer (Madras High Court)
In the case of C. Srinivasa Moorthy vs. Deputy State Tax Officer, the petitioner challenged an intimation regarding GST liability imposed on seigniorage fee and mining lease amounts paid to the Government under applicable GST laws. Here’s a detailed summary of the case:
Background: The petitioner contested the communication of GST liability on payments made for seigniorage fee and mining lease to the Government. The petitioner’s argument rested on Notification No.13/2017 – Central Tax (Rate), which excludes GST on services provided by the Central, State Government, or local authorities through renting of immovable property. Additionally, the petitioner cited interim orders from the Supreme Court, particularly in SLP(C) No. 37326 of 2017, where an interim stay was granted on GST imposition not only on royalty but also on mining leases pending a decision by a nine-judge Constitution Bench.
Legal Precedents: The petitioner’s counsel also referenced a Division Bench judgment in Venkatachalam v. Assistant Commissioner (ST), Palladam, which provided directions regarding the adjudication of show cause notices related to similar issues. The Division Bench had instructed that objections or representations should be submitted within four weeks of receiving the court order. It further mandated that adjudication should proceed only after affording a reasonable opportunity for the petitioners to be heard, and any orders were to be held in abeyance until the nine-judge bench’s decision regarding the nature of royalty.
Court’s Decision: Considering the principles laid down in the Venkatachalam case, the Madras High Court disposed of the present writ petition under similar terms. It allowed the petitioner a period of four weeks to submit a reply to the GST liability intimation received. The court reiterated that pending a decision by the nine-judge Constitution Bench on the nature of royalty and related issues, no recovery of GST on seigniorage fee or mining lease should be undertaken. The petitioner was also granted liberty to pursue appropriate remedies after the outcome of the nine-judge bench’s decision.
Disposition: Consequently, W.P.No. 12426 of 2024 was disposed of in accordance with the directions provided in the Venkatachalam case. The court clarified that no costs were imposed on the petitioner, and the connected miscellaneous petition (W.M.P.No. 13562 of 2024) was closed.
FULL TEXT OF THE JUDGMENT/ORDER OF MADRAS HIGH COURT
In this writ petition, the petitioner has assailed the intimation communicating the GST liability under applicable GST laws in respect of both seigniorage fee and mining lease amounts 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. 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, this petition is liable to be disposed of on the same terms insofar as it relates to either the issue of seigniorage fee or mining lease. Consequently, 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.No.12426 of 2024 is disposed of on the above terms. No costs. Consequently, W.M.P.No.13562 of 2024 is closed.
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