Facts of the Case

The petitioner, Mitambini Mishra, an individual holding a mining lease for sand quarrying under the Odisha Minor Minerals Concession Rules, 2016, was issued a Demand-cum-Show Cause Notice dated 17.02.2022 under Section 63 of the Odisha GST Act, 2017 in Form GST ASMT-14 (with Form GST DRC-01), proposing a demand of Rs.2,88,706/- (tax, interest and penalty) for tax periods 2020-21, on the basis that the petitioner had failed to register despite being liable under Section 24(iii) to pay GST at 18% on reverse-charge basis on royalty paid for its mining/quarrying rights, and had not filed returns.

Issues Involved

  1. Whether the writ petition against a mere demand-cum-show-cause notice, at a stage where no final demand had been raised, was maintainable.
  2. Whether the pendency of the larger constitutional question of whether royalty is a "tax" (referred to a nine-Judge Bench of the Supreme Court in Mineral Area Development Authority v. Steel Authority of India) justified staying the Section 63 proceedings against an unregistered person.

Petitioner's Arguments

  • The petitioner argued that royalty, being the State's share in minerals collected under the Odisha Minor Minerals Concession Rules, cannot be treated as consideration for a "service" attracting GST, relying on India Cement Ltd. v. State of Tamil Nadu (holding royalty is a tax) and the reference to a nine-Judge Bench in Mineral Area Development Authority.
  • Reliance was placed on interim protection granted by the Supreme Court in Udaipur Chambers of Commerce, and by coordinate orders of the Jharkhand, Andhra Pradesh and Meghalaya High Courts staying similar GST-on-royalty demands, seeking parity.

Respondent's Arguments

  • The Additional Standing Counsel for CT&GST submitted that no final demand had yet been raised — only a show-cause notice calling for a reply — making the writ petition premature, and that the petitioner was required to participate in the Section 63 proceeding rather than bypass it through a writ.

Court Order / Findings

  • The Court undertook a detailed review of the various Supreme Court and High Court interim orders cited by the petitioner and found that none of them actually restrained the Revenue from conducting or completing assessment proceedings — they only stayed the ultimate recovery of tax, and moreover the Andhra Pradesh and Meghalaya orders relied on a Supreme Court order (Lakhwinder Singh) that had itself since been dismissed.
  • The Court held that a decision of one High Court is not binding precedent on another, and that interim orders in particular carry no precedential value across coordinate courts, citing Valliamma Champaka Pillai and a long line of authority on stare decisis.
  • The Court held that entertaining a writ petition against a mere show-cause notice, without any lack of jurisdiction or violation of natural justice being shown, was impermissible per the settled self-imposed-restriction doctrine (Star Paper Mills, Coastal Container Transporters, South India Tanners), and that the pendency of the royalty-as-tax reference before the Supreme Court did not justify staying the Section 63 assessment proceeding itself.
  • The writ petition challenging the show-cause notice was accordingly rejected at the threshold, leaving the petitioner to respond to the notice and participate in the adjudication.

Important Clarification

  • A pending constitutional reference before a larger Bench of the Supreme Court on a foundational question (such as whether "royalty" is a "tax") does not, by itself, justify staying or quashing a Section 63 GST show-cause notice issued to an unregistered person on reverse-charge liability for mining royalty; the assessee must ordinarily respond to the notice and raise the legal contention before the adjudicating authority.
  • Interim orders of one High Court (or even the Supreme Court on a related SLP) granting a stay of recovery do not bind, and carry no precedential value for, another coordinate High Court; each court examines the current state of interim protection independently before deciding whether to grant similar relief.
  • Writ courts will not entertain a challenge to a mere show-cause notice at the threshold, absent a demonstrated lack of jurisdiction or violation of natural justice — the appropriate course is to respond to the notice and pursue the statutory adjudication process.

Sections Involved

  • Section 63 of the CGST/Odisha GST Act, 2017 - empowers assessment of unregistered persons liable to be registered.
  • Section 24(iii) of the CGST Act, 2017 - mandates compulsory registration for persons liable to pay tax under reverse charge.
  • Notification No.11/2017-Central Tax (Rate) - levies GST at 18% on licensing services for right to use minerals (including sand), on reverse-charge basis.

Decision – In Favour of

The writ petition was dismissed/rejected at the threshold in favour of the Department, with the Section 63 assessment proceeding permitted to continue; no opinion was expressed on the ultimate merits of the royalty-GST liability, which remains open before the adjudicating authority and, on the larger question, before the Supreme Court.

Case Details

High Court of Orissa at Cuttack, W.P.(C) No. 8492 of 2022; Coram: Hon'ble Mr. Justice Jaswant Singh and Hon'ble Mr. Justice Murahari Sri Raman; decided on 26 July 2022.

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