Facts of the Case

The petitioner, M/s Sanwariya Stone, through its authorised signatory, filed a writ petition before the Rajasthan High Court at Jodhpur challenging the impugned orders/notice issued by the respondent Department demanding GST on royalty collected by the petitioner.

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

Issues Involved

The principal issues arising from the matter were:

  1. Whether the impugned orders/notice demanding GST on royalty were liable to be interfered with in writ jurisdiction.
  2. Whether the Court should reconsider the issue despite a Coordinate Bench having already rejected an identical challenge to the leviability of GST on royalty.
  3. Whether the earlier Coordinate Bench ruling 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.
  4. Whether the pendency of the broader issue before a Nine-Judge Bench of the Supreme Court in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., (2011) 4 SCC 450 justified taking a different view.

Petitioner’s Arguments

The petitioner challenged the departmental demand of GST on royalty and urged that the writ petition deserved to be accepted.

Counsel for the petitioner specifically argued that the Division Bench 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.

Accordingly, the petitioner sought reconsideration of the issue notwithstanding the earlier Coordinate Bench decision rejecting an identical challenge to GST on royalty.

Respondents’ Arguments

The order records no appearance or substantive oral arguments on behalf of the respondents; the appearance column reflects “---” for the respondent side.

Accordingly, no independent or detailed respondent submissions should be attributed beyond what is expressly recorded in the order. The Court nevertheless considered the existing Coordinate Bench precedent governing the identical challenge.

Court Order / Findings

The Rajasthan High Court observed that:

  • A Division Bench of the same High Court, in a batch of writ petitions led by Sudarshan Lal Gupta vs Union of India & Ors., had already rejected an identical challenge to the demand of GST on royalty by order dated 27 September 2022.
  • Similar previous judgments had been challenged before the Supreme Court.
  • 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.
  • Despite such pendency, a Coordinate Bench of the Rajasthan High Court had already rejected the self-same challenge concerning the leviability of GST on royalty.
  • The Court was therefore not inclined to take a different view.

Consequently, the High Court held that there was no merit in the writ petition and dismissed it.

Important Clarification

This order should be understood with precision:

  • The High Court dismissed the petition primarily because a Coordinate Bench had already rejected the identical challenge to GST leviability on royalty.
  • The Court expressly acknowledged that the issue had not been finally decided by the Supreme Court at that stage.
  • The Court also noted that the matter was pending consideration before a Nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors.
  • Therefore, the order should not be presented as stating that the Supreme Court had finally settled the GST-on-royalty controversy as of the date of this order.
  • The judgment does not expressly identify a particular CGST Act or RGST Act section number; hence, inserting a specific section would go beyond the text of the order.

Link to download the order - https://mytaxexpert.co.in/uploads/1783493244_1443compressed.pdf

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