Facts of the Case

The petitioner, M/s Baba Ramdev Chemical and Mineral, a partnership firm, challenged show cause notices and assessment orders issued by the GST Department raising a demand of GST on royalty paid to the Mining Department towards a mining lease. The petition was heard along with connected matters raising the identical question.

Issues Involved

  1. Whether the levy of GST on royalty paid for a mining lease is sustainable in law.

Petitioner's Arguments

  • The petitioner challenged the imposition of GST on royalty paid towards the mining lease as impermissible, though learned counsel could not dispute that the identical issue already stood decided against the petitioner by the same Court.

Respondent's Arguments

  • The Additional Advocate General submitted that the issue was squarely covered by the Court's earlier decision dated 29.09.2022 in Shree Basant Bhandar Int Udyog v. Union of India (D.B. Civil Writ Petition No. 5678/2022), which itself relied on the Jaipur Bench's ruling dated 27.09.2022 in Sudershan Lal Gupta v. Union of India (D.B. Civil Writ Petition No. 8109/2022) upholding the imposition of GST on mining royalty.

Court Order / Findings

  • The Court noted that learned counsel for the petitioner was not in a position to dispute that the issue of GST on royalty paid for a mining lease already stood decided by the coordinate Division Bench in Sudershan Lal Gupta and Shree Basant Bhandar Int Udyog.
  • Following its earlier rulings, the Court held that the action of the respondents in imposing GST on mining royalty was not liable to be interfered with, and dismissed the writ petition in terms of those decisions.
  • The connected stay application was also dismissed.

Important Clarification

Where a coordinate Division Bench of the same High Court has already upheld the levy of GST on royalty paid for a mining lease under the reverse-charge mechanism, a subsequent writ petition raising the identical challenge will be dismissed by following that precedent rather than being independently re-examined.

Sections Involved

  • Section 9(3), CGST/RGST Act, 2017 — reverse-charge mechanism under which GST on mining royalty is demanded from the lessee.
  • Notification No. 13/2017-Central Tax (Rate) — notifies licensing/leasing services relating to natural resources for reverse-charge GST.

Decision – In Favour of

In favour of the Department — the writ petition was dismissed, following binding coordinate-bench precedent upholding GST on mining royalty.

Case Details

  • Court: High Court of Judicature for Rajasthan at Jodhpur
  • Case Number: [2023/RJJD/013338]
  • CNR / Citation: D.B. Civil Writ Petition No. 4542/2023
  • Coram: Hon'ble Mr. Justice Vijay Bishnoi & Hon'ble Mr. Justice Yogendra Kumar Purohit
  • Date of Order: 3 May 2023

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