Case Law Details
Md. Israil Vs Union of India & Ors. (Patna High Court)
The Patna High Court has scheduled a crucial hearing for January 30, 2024, concerning the contentious demand for 18% GST on the royalty for sand extraction. The case, titled Md. Israil Vs Union of India & Ors., revolves around the classification of royalty payments—whether they should be treated as a tax or a service. This decision could have significant implications for the mining sector and the application of GST in similar contexts.
The impugned demand originates from the Mining Department’s request, following an appeal by the Joint Commissioner of the State Taxes Department. The demand seeks an 18% GST on the royalty payments for sand extraction, which are stipulated in agreements between the petitioners and the State.
Legal Precedents and Arguments
The petitioners, represented by their legal counsel, have referenced various orders from both the Hon’ble Supreme Court and High Courts, including the High Court of Jharkhand, which have granted stays in similar cases. A critical element in their argument is the reference made by a Three-Judge Bench of the Supreme Court in the case of Mineral Area Development Authority and Others v. Steel Authority of India and Others (2011), which deferred to a Nine-Judge Bench for a final decision. This reference was made due to conflicting judgments between the Five-Judge Bench in State of West Bengal v. Kesoram Industries Ltd. (2004) and the Seven-Judge Bench in India Cement Ltd. v. State of T.N. (1990), which categorically classified royalty as a tax.
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