2023 (5) TMI 593 - HC - GST

Levy of GST - grant of mining lease/royalty - petitioner has vehemently urged that the royalty payment is tax and not consideration in the context of the privilege parted by the State allowing the petitioner and others to mine sand - HELD THAT - Similar controversy is engaging the attention of the Supreme Court in M/s Lakhwinder Singh vs. Union of India Ors. in Writ Petition (Civil) No. 1076 of 2021 2021 (11) TMI 336 - SC ORDER . On 04.10.2021 the Supreme Court has held that Until further orders payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed. Until further orders payment of GST for grant of mining lease/royalty by the petitioner shall remain stayed.

Summary

Issues involved: Interpretation of royalty payment as tax or consideration for GST liability.

The petitioner argued that the royalty payment is not amenable to GST as it is not considered as payment for sale of goods or services provided, but rather as a tax due to the privilege granted by the State for mining sand. Reference was made to a Supreme Court decision in India Cement Ltd. case where royalty payment was deemed to be in the nature of tax.

The petitioner also highlighted a similar ongoing controversy before the Supreme Court in the case of M/s Lakhwinder Singh vs. Union of India & Ors., where the Supreme Court ordered a stay on the payment of GST for grant of mining lease/royalty until further notice. The petitioner requested a similar stay in the present case until the matter is resolved.

The High Court directed the case to be connected and listed with another related matter. Additionally, the High Court granted the petitioner's request for a stay on the payment of GST for grant of mining lease/royalty until further orders, in line with the Supreme Court's decision in the referenced case.