Dharmaraj Vs Union of India (Madras High Court)
In this writ petition before the Madras High Court, the petitioner challenged Show Cause Notice No. 12/2025-GST-AC dated 29.09.2025, which proposed to levy GST on seigniorage/royalty fee payable to the Government of Tamil Nadu. The petitioner relied on earlier decisions of the High Court rendered in similar circumstances, particularly a Division Bench judgment in which directions were issued in cases where levy of GST on royalty was under challenge, noting that the issue is presently pending before a Nine Judge Constitution Bench of the Hon’ble Supreme Court.
In the cited decision, the Division Bench directed that writ petitioners challenging show cause notices should submit their objections within four weeks, and the concerned authority should adjudicate the matter on merits after affording reasonable opportunity of hearing. However, the adjudication orders were to be kept in abeyance until the Supreme Court decides the issue regarding the nature of royalty. It was further clarified that there shall be no recovery of GST on royalty until the Constitution Bench renders its decision, and all contentions of the parties were kept open.
Following the same reasoning, the Court disposed of the present writ petition on similar terms. The petitioner was permitted to submit a reply to the Show Cause Notice within four weeks from receipt of the order. The respondent authority was directed to proceed with adjudication but keep the implementation of any assessment order in abeyance pending the Supreme Court’s decision.
