Facts of the Case

Anmol Granites, through its authorised signatory partner Shri Vinod Kumar, 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 were:

  1. Union of India through the Secretary, Finance Department, Government of India, New Delhi;
  2. State of Rajasthan through the Principal Secretary, Finance Department (Tax Division), Secretariat, Jaipur;
  3. Secretary, Mining Department, Government of Rajasthan, Secretariat, Jaipur; and
  4. Deputy Commissioner (State Tax), Circle C, Bhilwara, Rajasthan.

The dispute concerned the leviability of GST on royalty.

The Division Bench noted that an identical challenge had already been considered in a batch of writ petitions led by:

D.B. Civil Writ Petition No. 8109/2022 – Sudarshan Lal Gupta vs Union of India & Others

The Jaipur Bench of the Rajasthan High Court, by order dated 27 September 2022, had repelled the identical challenge to the demand of GST on royalty.

Despite the earlier coordinate-bench ruling, learned counsel for Anmol Granites continued to press the writ petition and argued that the earlier Division Bench had failed to correctly interpret a Supreme Court judgment.

The Rajasthan High Court ultimately declined to take a different view from its coordinate Bench and dismissed the writ petition.

Issues Involved

The principal issues involved in the matter were:

  1. Whether the impugned orders/notice demanding GST on royalty collected by the petitioner were liable to be quashed or interfered with in writ jurisdiction.
  2. Whether GST was leviable on royalty in the circumstances forming the subject matter of the petition.
  3. Whether the petitioner could successfully maintain an identical challenge after a coordinate Division Bench of the Rajasthan High Court had already repelled the same challenge in Sudarshan Lal Gupta vs Union of India & Others and connected matters.
  4. Whether 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.
  5. Whether the pendency of the broader issue before a nine-Judge Bench of the Supreme Court in Mineral Area Development Authority etc. & Others vs M/s Steel Authority of India & Others justified the present Division Bench taking a different view.
  6. Whether the present Division Bench should follow the existing coordinate-bench ruling concerning the self-same challenge to leviability of GST on royalty.

Petitioner’s Arguments

The petitioner, Anmol Granites, challenged the Departmental orders/notice demanding GST on royalty.

The principal arguments recorded in the order were as follows:

  • The earlier Division Bench decision in Sudarshan Lal Gupta vs Union of India & Others should not prevent acceptance of the present writ petition.
  • Learned counsel for the petitioner vehemently urged that the Division Bench deciding Sudarshan Lal Gupta had failed to make a correct interpretation of 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 this basis, it was argued that the writ petition merited acceptance despite the earlier coordinate-bench ruling.
  • The petitioner’s argument therefore sought to persuade the present Division Bench not to follow the earlier view rejecting the challenge to GST on royalty.

Respondents’ Arguments

The short judicial order does not record any separate detailed arguments on behalf of the respondents.

The appearance section records no counsel for the respondents. Therefore, no additional or assumed submissions should be attributed to the Union of India, State of Rajasthan, Mining Department, or State Tax Department beyond the Departmental action expressly challenged in the petition.

The respondents’ position, insofar as apparent from the nature of the proceedings, was reflected in the impugned orders/notice demanding GST on royalty collected by the petitioner.

Court Order / Findings

The Rajasthan High Court dismissed the writ petition. Its material findings and reasoning were as follows:

1. Identical Challenge Had Already Been Rejected by a Coordinate Division Bench

The Court noted that in a batch of writ petitions led by:

Sudarshan Lal Gupta vs Union of India & Others, D.B. Civil Writ Petition No. 8109/2022

and connected matters, a Division Bench of the Rajasthan High Court at Jaipur Bench had already considered an identical challenge.

By order dated 27 September 2022, the earlier Division Bench had repelled the identical challenge to the demand of GST on royalty.

This earlier ruling formed the central basis of the present order.

2. Petitioner Challenged the Correctness of the Earlier Interpretation

The petitioner contended that the 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, Civil Appeal No. 6492/2002, decided on 17 March 2009.

The present Division Bench considered this submission but did not regard it as sufficient to depart from the coordinate-bench ruling.

3. Similar Previous Judgments Had Been Challenged Before the Supreme Court

The High Court expressly acknowledged that similar previous judgments had been challenged before the Supreme Court.

This observation is important because it demonstrates that the Court was aware of the continuing litigation surrounding the broader legal controversy.

4. Issue Had Not Been Finally Decided by the Supreme Court

The Court specifically recorded that the issue had not been finally decided by the Supreme Court.

Therefore, the judgment should not be read as stating that the Supreme Court had already conclusively resolved every broader issue concerning royalty.

5. Nine-Judge Bench Proceedings Were Expressly Noted

The Court referred to:

Mineral Area Development Authority etc. & Others vs M/s Steel Authority of India & Others, reported in (2011) 4 SCC 450.

The High Court recorded that the issue was pending consideration before a Bench of nine Judges.

However, this pendency did not lead the present Division Bench to take a different view from the coordinate Bench of the Rajasthan High Court.

6. Court Declined to Take a Different View

The decisive finding was that a coordinate Bench of the same High Court had already repelled the self-same challenge to leviability of GST on royalty.

Accordingly, the Court held that it was not inclined to take a different view in the matter.

7. Writ Petition Had No Merit

In view of the above reasoning, the Court found no merit in the writ petition.

The writ petition was therefore dismissed.

Final Order

The Rajasthan High Court concluded that a coordinate Division Bench had already rejected the identical challenge to the leviability of GST on royalty and that the present Bench was not inclined to take a different view.

Result: The writ petition was dismissed as having no merit.

Important Clarification

This judgment requires careful reading because it is a short order based substantially on an earlier coordinate-bench ruling.

The following clarifications emerge from the order:

  • The Court did not undertake an elaborate independent interpretation of the charging provisions of the GST enactments.
  • The Court primarily dismissed the petition because a coordinate Division Bench had already rejected the self-same challenge to GST leviability on royalty.
  • The petitioner’s argument that Sudarshan Lal Gupta incorrectly interpreted State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha did not persuade the Court to depart from the earlier view.
  • The Court expressly acknowledged that similar previous judgments had been challenged before the Supreme Court.
  • The Court expressly acknowledged that the issue had not been finally decided by the Supreme Court.
  • The Court also noted the pending consideration before a nine-Judge Bench in Mineral Area Development Authority etc. & Others vs M/s Steel Authority of India & Others.

Therefore, the precise ratio of the order is that the present Division Bench declined to take a different view from a coordinate Bench that had already repelled the identical challenge to GST on royalty.

The judgment should not be expanded beyond the actual reasoning recorded in the two-page order.

Sections Involved

·         Article 226 of the Constitution of India

·         GST Provisions Relating to Royalty

Link to download the order - https://www.mytaxexpert.co.in/uploads/1783492347_1463compressed.pdf

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