Facts of the Case

Two connected petitioners, M/s. MGR Stone Crisher, Uttar Kannada (GSTIN 29ABKFM0348N1ZQ) and M/s. MAK Stone Crusher and M-Sand Unit, Belagavi (GSTIN 29AFEPK2955F1ZD), challenged the Notifications and CBIC Circular No.164/20.2021-GST dated 06.10.2021 that led to levy of GST on the amount of royalty paid by them, along with the consequential assessment orders dated 15.11.2024 (for FY 2022-23) and 28.03.2024 (for FY 2019-20) respectively.

Issues Involved

  1. Whether the writ petitions challenging the Notifications/Circular levying GST on royalty ought to be entertained, or whether the petitioners should be relegated to the statutory appellate remedy under Section 107 of the GST Act.

Petitioner's Arguments

  • The petitioners relied on a judgment of the Supreme Court to contend that the writ petitions ought to be allowed on the question of GST levy on royalty.

Respondent's Arguments

  • The Additional Government Advocate relied on the judgments of a Co-ordinate Bench in WP.No.100875/2024 and of the same Court in WP.No.103311/2025, and submitted that since Section 107 of the Karnataka GST Act provides a specific appellate remedy, the petitioner ought to be relegated to that remedy so that all contentions can be urged before the Appellate Authority; the Supreme Court's judgment on GST-on-royalty was not disputed.

Court Order / Findings

  • Justice Pradeep Singh Yerur noted the Supreme Court's guidelines (para 25(a)-(c)) in the Mineral Area Development Authority line of cases, under which: the demand of tax on royalty under Entries 49 and 50 of List II shall not operate on transactions before 1 April 2005; payment of the demand may be staggered in instalments over twelve years from 1 April 2026; and levy of interest and penalty on demands made for the period before 25 July 2024 stands waived for all assessees.
  • In view of the specific appellate remedy under Section 107 of the GST Act, the Court deemed it appropriate to dispose of the petitions on the ground of availability of an alternative efficacious remedy, without going into the individual merits.
  • The writ petitions were disposed of with liberty to approach the appellate authority, with all contentions permitted to be urged there, and the time spent in the writ petitions directed to be condoned by the appellate authority.

Important Clarification

  • Where the statutory appellate remedy under Section 107 of the GST Act is available, the High Court will ordinarily relegate a challenge to GST-on-royalty demands to that forum rather than examine the Notifications/Circular in writ jurisdiction, while directing the appellate authority to condone the time spent in the writ petition.
  • Per the Supreme Court's conditionalities on GST-on-royalty demands, interest and penalty on demands pertaining to periods before 25 July 2024 stand waived for all assessees, and the underlying tax demand can be paid in instalments staggered over twelve years commencing 1 April 2026, with no levy permitted on transactions before 1 April 2005.

Sections Involved

  • Section 107, Karnataka Goods and Services Tax Act, 2017 — statutory appeal to the Appellate Authority.
  • CBIC Circular No.164/20.2021-GST dated 06.10.2021 — clarification leading to levy of GST on mining royalty.

Decision – In Favour of

Disposed of on the ground of alternative remedy, in part in favour of the Assessee — no merits decided, but the Supreme Court's interest/penalty waiver for pre-25 July 2024 demands preserved for consideration before the Appellate Authority.

Case Details

Court: High Court of Karnataka, Dharwad Bench
Case No.: WP No. 102199 of 2025 c/w WP No. 102258 of 2025
Neutral Citation: 2025:KHC-D:8097
Coram: Hon'ble Mr. Justice Pradeep Singh Yerur
Date of Order: 26.06.2025

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