Facts of the Case

The petitioner, engaged in mining, had been issued a show-cause notice dated 31.05.2022 for the tax period 2017-18 to August 2020, proposing to levy GST on royalty paid for mining rights. The petitioner sought to challenge this notice as illegal, arbitrary and without jurisdiction, and also sought to challenge Circular No. 164/20/2021-GST dated 06.10.2021 (which addresses the GST rate applicable to royalty under the reverse charge mechanism) to the extent it fixed the rate for mining rights royalty at 18% for the disputed period, along with a prayer that the petitioner was not liable to pay GST on royalty at all for that period.

By the time the writ petition was heard, however, it emerged that the show-cause notice had already culminated in a final order — a summary order in Form DRC-07, bearing Reference No. 37AAEFP7698H1ZW, dated 31.05.2022 (the same date as the notice) — determining the petitioner's liability.

Issues Involved

  1. Whether a writ petition challenging a show-cause notice remains maintainable once that notice has already culminated in a final adjudication order (DRC-07).

Petitioner's Arguments

  • The show-cause notice proposing GST liability on mining royalty for 2017-18 to August 2020 was illegal, arbitrary and without jurisdiction.
  • Circular No. 164/20/2021-GST, to the extent it fixed an 18% GST rate on mining rights royalty for the period in question, was arbitrary, irrational, illegal and void.
  • The petitioner is not liable to pay GST on royalty for mining rights for the disputed period at all.

Respondent's Arguments

  • No separate counter-arguments are recorded; the disposal turned on the procedural fact that a final order had already superseded the show-cause notice.

Court Order / Findings

  • The Court noted that a final order in Form DRC-07 had already been passed pursuant to the show-cause notice on the very same date, determining the petitioner's liability.
  • It held that, in these circumstances, the petitioner — if aggrieved — should challenge the final DRC-07 order rather than the show-cause notice that preceded it.
  • The writ petition challenging the show-cause notice was accordingly dismissed, with liberty granted to the petitioner to challenge the final order dated 31.05.2022 in accordance with law.

Important Clarification

This order does not decide the substantive question of whether GST on mining royalty (under reverse charge) is correctly pegged at 18% for the 2017-18 to August 2020 period — a live and contested issue in GST litigation nationally, tied up in the Supreme Court's Mineral Area Development Authority line of cases. It only establishes the procedural point that once a show-cause notice has matured into a final order, the taxpayer's remedy lies against that final order, not the earlier notice.

Sections Involved

  • Central Goods and Services Tax Act, 2017 and Andhra Pradesh Goods and Services Tax Act, 2017 — reverse charge mechanism on royalty for mining rights
  • Circular No. 164/20/2021-GST dated 06.10.2021 — clarifying GST rate on royalty for mining rights under RCM
  • Constitution of India, 1950 — Article 226

Decision – In Favour of

Disposed of against the petitioner on the writ petition as framed, without a decision on the GST-on-royalty question itself — liberty was granted to challenge the final DRC-07 order instead.

Case Details

  • Court: High Court of Andhra Pradesh at Amaravati
  • Case No.: Writ Petition No. 16470 of 2023
  • Coram: Justice U. Durga Prasad Rao and Justice Venkata Jyothirmai Pratapa
  • Date of Order: 07.07.2023

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