Facts of the Case

R.R. Construction, a Madurai-based partnership engaged in quarrying and transporting minerals, challenged a notice dated 19.10.2025 issued by the Deputy State Tax Officer-2, Chokikulam Assessment Circle, Madurai, seeking to levy GST on the Seigniorage fee/Royalty and District Mineral Foundation Trust (DMFT) contribution paid by the petitioner for the tax period 2020-2021. The petitioner sought quashing of the notice at the admission stage itself. The Madurai Bench of the Madras High Court, per Justice G.R. Swaminathan, disposed of the writ petition on 12 November 2025, noting that the correctness of levying GST on royalty/Seigniorage fee paid to the State for mining rights is currently pending consideration before the Supreme Court of India.

Issues Involved

  1. Whether GST can be levied on Seigniorage fee/Royalty and DMFT contribution paid for the right to quarry and transport minerals, an issue currently pending before the Supreme Court.
  2. Whether proceedings pursuant to the impugned notice should be kept in abeyance pending the Supreme Court's decision.
  3. Whether the petitioner should be required to secure the disputed tax by way of deposit in the interim.

Petitioner's Arguments

  • Sought quashing, by a writ of certiorari, of the impugned notice dated 19.10.2025 proposing to levy GST on the Seigniorage fee/Royalty and DMFT paid by the petitioner for quarrying and transporting minerals for the tax period 2020-2021.
  • The correctness of levying GST on royalty/Seigniorage fee paid for mining rights is itself sub judice and pending before the Hon'ble Supreme Court of India, so no coercive proceedings should be taken against the petitioner until that larger question is authoritatively settled.
  • Sought disposal of the writ petition at the admission stage itself, on terms consistent with orders passed in the petitioner's own earlier, similarly-placed case.

Respondent's Arguments

  • No independent contest is recorded from the Deputy State Tax Officer or the Additional Government Pleader beyond participating in the hearing; the order proceeds on the basis of the pending Supreme Court reference and the petitioner's own precedent, without a recorded rebuttal on merits.

Court Order / Findings

  • The Court took note that the levy of GST on Seigniorage fee/Royalty paid for quarrying and transporting minerals is presently pending before the Supreme Court of India, making it inappropriate to allow the impugned proceedings to proceed to finality at this stage.
  • Where the very taxability of Seigniorage fee/Royalty and DMFT contribution under GST is sub judice before the Supreme Court, a High Court will keep the impugned proceedings in abeyance rather than decide the levy issue itself, while safeguarding revenue through an interim deposit.
  • The writ petition was disposed of at the admission stage itself, directing the respondent to keep all proceedings pursuant to the impugned notice in abeyance and to await the Supreme Court's ruling before proceeding further in accordance with law.
  • The petitioner was directed to deposit 10% of the disputed tax as security, consistent with directions issued in its own earlier case, with no costs and connected miscellaneous petitions closed.

Important Clarification

  • The question of whether GST is leviable on Seigniorage fee/Royalty and District Mineral Foundation Trust contributions paid for mining rights remains pending before the Supreme Court, and assessees facing similar demands can seek interim protection by way of abeyance rather than a final adjudication at the High Court level.
  • Courts granting such abeyance commonly condition the relief on the assessee securing a portion — here, 10% — of the disputed tax as a deposit, balancing revenue interest against the pendency of the larger legal question.

Sections Involved

  • GST Act, 2017 (levy provisions) — proposed levy of GST on Seigniorage fee/Royalty and DMFT contributions for mining rights, the substantive question kept pending.
  • Article 226, Constitution of India — writ jurisdiction invoked to seek abeyance of proceedings pending the Supreme Court's ruling.

Decision – In Favour of

Disposed of with directions; interim relief in favour of the petitioner (proceedings held in abeyance) subject to a 10% pre-deposit, without a final ruling on the GST-on-royalty question itself.

Case Details

Court: Madurai Bench of the Madras High Court. Case No.: W.P.(MD) No. 32118 of 2025 (with W.M.P.(MD) Nos. 25263 and 25264 of 2025). Coram: Hon'ble Mr. Justice G.R. Swaminathan. Date of Order: 12 November 2025.

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