Facts of the Case

The petitioner, Arham Marbles at Kelwa, Rajsamand, approached the Rajasthan High Court by filing D.B. Civil Writ Petition No. 12490/2022. The writ petition challenged the impugned orders/notice issued by the respondent Department demanding GST on royalty collected from the petitioner.

The High Court noted that an identical challenge concerning 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 writ petitions led by Sudarshan Lal Gupta vs Union of India & Ors., D.B. Civil Writ Petition No. 8109/2022 and connected matters, decided by order dated 27 September 2022.

Despite the earlier coordinate Bench ruling, the petitioner urged the Court to reconsider the issue on the ground that the decision in Sudarshan Lal Gupta vs Union of India & Ors. had allegedly 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.

The Court also recorded that similar previous judgments had been challenged before the Supreme Court and that the broader issue was 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.

However, since a coordinate Bench of the Rajasthan High Court had already rejected the same challenge to the leviability of GST on royalty, the Division Bench declined to take a different view and dismissed the writ petition.

Issues Involved

The principal issues arising from the order were:

  1. Whether the demand of GST on royalty collected from the petitioner could be legally challenged and set aside.
  2. Whether the Rajasthan High Court should reconsider the issue despite the coordinate Bench decision in Sudarshan Lal Gupta vs Union of India & Ors., which had already rejected an identical challenge to GST on royalty.
  3. Whether the alleged incorrect interpretation of State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha by the earlier Division Bench justified taking a different view.
  4. Whether the pendency of the broader royalty-related issue before a nine-Judge Bench of the Supreme Court warranted interference with the GST demand.
  5. Whether judicial discipline required the present Division Bench to follow the coordinate Bench ruling on the self-same issue of leviability of GST on royalty.

Petitioner’s Arguments

The petitioner challenged the impugned orders/notice issued by the Department demanding GST on royalty.

Counsel for the petitioner, Mr. Prateek Gattani, strongly urged that the earlier Division Bench decision in Sudarshan Lal Gupta vs Union of India & Ors. did not 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 contended that notwithstanding the earlier Rajasthan High Court ruling rejecting an identical challenge, the present writ petition deserved acceptance.

In substance, the petitioner sought a departure from the coordinate Bench view by questioning the correctness of the interpretative basis of the earlier ruling.

Respondents’ Arguments

The uploaded order records “For Respondent(s): ---” and does not set out any separate oral or written arguments advanced on behalf of the respondents.

Therefore, no independent respondent submissions should be attributed beyond what is expressly contained in the judicial order.

The Departmental position apparent from the subject matter of the litigation was the enforcement of the impugned orders/notice demanding GST on royalty; however, the order itself does not record detailed respondent arguments.

Court Order / Findings

The Rajasthan High Court dismissed the writ petition and recorded the following material findings:

  • 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 the batch of petitions led by Sudarshan Lal Gupta vs Union of India & Ors.
  • The Court acknowledged the petitioner’s argument that the earlier Division Bench had allegedly failed to correctly interpret the Supreme Court judgment in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha.
  • The Court also expressly noticed that similar previous judgments had been challenged before the Supreme Court.
  • It further 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.
  • Nevertheless, the Court held that a coordinate Bench had already rejected the self-same challenge to the leviability of GST on royalty.
  • Consequently, the Bench stated that it was not inclined to take a different view in the matter.
  • The Court found no merit in the writ petition and dismissed it accordingly.

Thus, the decisive basis of the order was the existence of a prior coordinate Bench ruling rejecting the identical challenge concerning GST on royalty.

Important Clarification

This judgment requires careful reading because the High Court did not undertake a fresh, exhaustive adjudication of every substantive constitutional or statutory argument concerning GST on royalty.

The Court’s immediate reasoning was substantially based on the following position:

  • a coordinate Bench had already rejected the identical challenge;
  • the broader issue had not been finally decided by the Supreme Court at that stage;
  • the matter was stated to be pending before a nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors.; and
  • the present Bench was not inclined to take a different view from the coordinate Bench.

Accordingly, the decision should not be overstated as an independent, exhaustive determination of every conceivable legal question relating to royalty, tax, mineral rights, or GST classification. The precise holding is that the Court declined to depart from the coordinate Bench decision that had already repelled the self-same challenge to the leviability of GST on royalty and therefore dismissed the writ petition.

A further important clarification is that the uploaded order itself does not specify a particular GST rate, SAC classification, reverse charge notification entry, or detailed charging-section analysis. Such particulars should not be inserted into the case summary as though they were express findings of this judgment.

Sections / Statutory Provisions Involved

No specific statutory section is expressly identified or analysed in the uploaded two-page order.

The case concerns the leviability/demand of GST on royalty, but the judgment does not expressly mention or adjudicate any particular provision of the:

  • Central Goods and Services Tax Act, 2017;
  • Rajasthan Goods and Services Tax Act, 2017;
  • Integrated Goods and Services Tax Act, 2017; or
  • any specific GST notification entry.

Therefore, to preserve the exact meaning and accuracy of the judicial order, no unmentioned statutory section should be attributed to the Court.

Link to download the order -https://www.mytaxexpert.co.in/uploads/1783492855_1397compressed.pdf

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