Facts of the Case

M/s Hariom Mines and Minerals, through its partner Mr. Hemendra Kalal, filed a writ petition before the Rajasthan High Court at Jodhpur challenging the impugned orders/notice issued by the respondent Department demanding GST on the royalty collected by the petitioner.

The respondents included the Union of India through the Secretary, Finance Department; the State of Rajasthan through the Principal Secretary, Finance Department (Tax Division); the Secretary, Mining Department, Government of Rajasthan; and the Deputy Commissioner, Circle A, Enforcement Branch II, State Tax, Jaipur.

The Division Bench noted that an identical challenge to the demand of GST on royalty had already been rejected by a Division Bench of the Rajasthan High Court at Jaipur Bench through an order dated 27 September 2022 in a batch of writ petitions led by Sudarshan Lal Gupta vs Union of India & Ors., D.B. Civil Writ Petition No. 8109/2022, along with connected matters.

Despite the earlier coordinate Bench ruling, the petitioner sought acceptance of its writ petition by questioning the reasoning adopted in the Sudarshan Lal Gupta matter.

The Court further noted that similar previous judgments had been challenged before the Supreme Court and that the broader issue had not been finally decided, with the matter stated in the order to be pending consideration before a nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., reported in (2011) 4 SCC 450.

Nevertheless, because a coordinate Bench of the same High Court had already rejected the identical challenge concerning leviability of GST on royalty, the Jodhpur Bench declined to take a different view and dismissed the writ petition. The two-page order and its operative dismissal are recorded in the uploaded judgment.

Issues Involved

The principal issues arising in the writ petition were:

  1. Whether the impugned orders/notice demanding GST on royalty collected by the petitioner were legally sustainable.
  2. Whether the Rajasthan High Court should reconsider the issue despite the coordinate Bench decision dated 27 September 2022 in Sudarshan Lal Gupta vs Union of India & Ors.
  3. Whether the earlier coordinate Bench had failed to correctly interpret the Supreme Court decision in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha, Civil Appeal No. 6492/2002, decided on 17 March 2009.
  4. Whether the pendency of related questions before the Supreme Court, including the proceedings referred to in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., justified a different view by the present Division Bench.
  5. Whether judicial discipline and consistency required the present Bench to follow the coordinate Bench ruling rejecting an identical challenge to the leviability of GST on royalty.

Petitioner’s Arguments

The petitioner challenged the departmental orders/notice demanding GST on royalty.

Learned counsel for the petitioner, Mr. Vinay Kothari, strongly urged that the Division Bench decision in Sudarshan Lal Gupta vs Union of India & Ors. had failed to correctly interpret the Supreme Court judgment in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha, Civil Appeal No. 6492/2002, decided on 17 March 2009.

On that basis, the petitioner contended that notwithstanding the earlier coordinate Bench ruling, the present writ petition deserved to be accepted.

The substance of the petitioner’s case was therefore that the prior rejection of an identical challenge should not prevent reconsideration because, according to the petitioner, the relevant Supreme Court precedent had not been correctly interpreted in the earlier Rajasthan High Court decision.

Respondent’s Arguments

The uploaded order records no appearance on behalf of the respondents, showing “---” against the respondents’ representation.

Accordingly, the order does not set out any separate substantive oral or written arguments advanced by the respondents.

This is an important factual clarification: no independent respondent submissions should be attributed beyond what is expressly recorded in the judgment. The Court decided the matter after considering the petitioner’s challenge, the earlier coordinate Bench ruling, and the judicial precedents referred to in the order.

Court Order / Findings

The Rajasthan High Court dismissed the writ petition.

The Court’s findings may be summarised as follows:

  1. An identical challenge to the demand of GST on royalty had already been rejected by a Division Bench of the Rajasthan High Court at Jaipur Bench in a batch of petitions led by Sudarshan Lal Gupta vs Union of India & Ors., D.B. Civil Writ Petition No. 8109/2022 and connected matters, by order dated 27 September 2022.
  2. The petitioner argued that the coordinate Bench in Sudarshan Lal Gupta had failed to correctly interpret the Supreme Court decision in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha.
  3. The Court acknowledged that similar previous judgments had been challenged before the Supreme Court.
  4. The Court also recorded that the issue had not been finally decided by the Supreme Court and was pending consideration before a nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., (2011) 4 SCC 450.
  5. However, since a coordinate Bench of the Rajasthan High Court had already rejected the selfsame challenge to leviability of GST on royalty, the present Bench held that it was not inclined to take a different view.
  6. Consequently, the Court found no merit in the writ petition and dismissed it.

The operative conclusion appears on page 2 of the uploaded order, where the Division Bench expressly records that it was not inclined to depart from the coordinate Bench view and dismissed the petition for lack of merit.

Important Clarification

1. The Court Did Not Undertake a Fresh Final Determination of the Entire GST-on-Royalty Controversy

The order is significant because the present Division Bench primarily relied upon the fact that a coordinate Bench had already rejected an identical challenge in Sudarshan Lal Gupta vs Union of India & Ors.

Therefore, the dismissal was substantially grounded in adherence to the coordinate Bench position rather than an elaborate fresh adjudication of every constitutional and statutory argument concerning GST on royalty.

2. Pendency Before the Supreme Court Was Expressly Noted

The High Court expressly acknowledged that similar previous judgments had been challenged before the Supreme Court and that the broader issue had not been finally decided, as recorded in the order.

Thus, the judgment should not be described as stating that every broader legal controversy surrounding royalty stood finally settled by the Supreme Court at that stage.

3. Coordinate Bench Discipline Was Central to the Decision

The decisive reasoning was that a coordinate Bench of the same High Court had already rejected the same challenge to the leviability of GST on royalty. The present Bench therefore declined to take a different view.

This aspect makes the decision particularly relevant to the principle of judicial discipline among coordinate Benches.

4. The Petitioner Specifically Relied on State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha

The petitioner’s argument was not merely a general objection to GST on royalty. Counsel specifically contended that the earlier Division Bench in Sudarshan Lal Gupta had failed to correctly interpret the Supreme Court judgment in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha.

The High Court nevertheless did not accept this as a sufficient basis to depart from the coordinate Bench ruling.

5. No Respondent Arguments Were Recorded

Since the order records no appearance for the respondents, it would be inaccurate to create or infer detailed departmental submissions. The judgment contains no separately recorded respondent arguments.

6. The Petition Was Dismissed; No Interim Protection Was Granted in the Operative Order

The final result was straightforward: the Court found no merit in the writ petition and dismissed it.

Sections / Legal Provisions Involved

·         Article 226 of the Constitution of India – Writ jurisdiction of the High Court, under which the petitioner challenged the impugned departmental orders/notice.

·         Article 227 of the Constitution of India – May arise in the broader supervisory jurisdiction context depending upon the petition framing, but the uploaded order itself does not expressly discuss this provision; therefore, it should not be presented as a specific finding of the Court.

·         Central Goods and Services Tax Act, 2017 / Rajasthan Goods and Services Tax framework – Relevant to the controversy concerning the demand of GST on royalty, though the short order does not specify a particular charging or procedural section.

Important accuracy note: The judgment itself is framed around the challenge to GST demand on royalty and the effect of the coordinate Bench decision. It does not contain a detailed section-wise statutory analysis.

Link to download the order -

https://www.mytaxexpert.co.in/uploads/1783419429_1453compressed.pdf

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