TMI Blog2022 (8) TMI 753X X X X Extracts X X X X X X X X Extracts X X X X ..... ck of jurisdiction nor is there any allegation of violation of principles of natural justice. The petitioner has ample opportunity to agitate issue before the Proper Officer. Therefore, this Court feels entertainment of the writ petition at the stage of Demand-cum- Show Cause Notice would be premature. Doing so would frustrate the tax administration and adjudication process. This Court is alive to the fact that the statute under consideration, viz., the CGST/OGST Act(s) and rules framed thereunder provide sufficient safeguard for the assessee-petitioner, more so, when against the final orders of adjudication, appeal lies. It is, therefore, necessary for the Proper Officer to examine on the basis of materials available on record and that are furnished by the petitioner-assessee whether he is required to proceed to assess the tax liability of the taxable person on account of failure to obtain registration - the enquiry/process of assessment requires factual determination with reference to liability and requirement of obtaining registration. Having not found illegality, irrationality, procedural impropriety and proportionality in issue of Demand-cum-Show Cause Notice by the Proper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2. That those leased rights, i.e., Licensing Services for right to use of minerals (in this case SAND) including its exploitation and evaluation is covered under HSN Code 997337 and attracts 18% GST under Sl. No.17(viii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017. Such tax is to be paid on reverse charge basis, i.e., by lessees @18% of the value of such supply of services which includes Royalty, DMF and NMET contributions. 2.3. Further, in accordance with clause (iii) of Section 24 of the Act, the noticee is required to be compulsorily register itself, being liable to pay tax under the OGST/CGST Act, the noticee is liable both for compulsory registration and payment of tax @18% GST, as discussed above. 3. It is the contention of the counsel for the petitioner that since royalty is collected by the Government under the provisions of the Odisha Minor Minerals Concession Rules, 2016, the impugned impost on the royalty treating the same as service is impermissible in law. Therefore, the petitioner has made the following prayers: In view of the facts and circumstances of the case, it is respectfully prayed that this Hon ble Court may be p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for appropriate orders. 3.2. Sri Satapathy, therefore, argued that in view of interim order of stay of payment of service tax under Chapter-V of the Finance Act, 1994 for grant of mining lease/royalty being granted by the Hon ble Supreme Court vide Order dated 11.01.2018 in the cases of Udaipur Chambers of Commerce Industry Others, S.L.P.(C) No.37326 of 2017, this Court is required to pass necessary orders granting stay of further proceeding (which is at the stage of Show Cause only) by the Proper Officer-Joint Commissioner of State Tax, CT GST Circle, Jajpur, Jajpur Road who has exercised power to determine the tax liability in respect of unregistered person under Section 63 of the OGST/CGST Act. 3.3. The counsel for the petitioner, Sri Tushar Kanti Satapathy, has further placed reliance on interim Orders passed by different High Courts more particularly Order dated 20.04.2022 passed in Mandhan Minerals Corporation Vrs. Union of India, W.P.(T) No. 432 of 2021 batch of matters pending adjudication before the Hon ble High Court of Jharkhand at Ranchi. 3.4. Therefore, the counsel for the petitioner submitted that parity may be maintained by extending the simi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision contained in Section 63 clearly establishes that the proceeding under said provision is initiated by the proper officer to assess the tax liability of taxable person: i. who failed to obtain registration even though liable to do so, or ii. whose registration has been cancelled under sub-section (2) of Section 29. 5.1. Reading of impugned Show Cause Notice dated 17.02.2022 would reveal that in terms of Section 24(iii) of the CGST/OGST Act notwithstanding the fact that the petitioner was liable for compulsorily registered inasmuch as it is required to discharge tax liability on reverse charge mechanism, it has not acted in consonance with statutory mandate. 5.2. This Court is not persuaded by the explanation of the counsel for the petitioner that the petitioner would not come within the fold of Section 24(iii) as it is not liable to pay GST @18% on the amount of royalty paid to the Government in respect of its licensing services for right to use of mineral, i.e., sand in view of the fact that the Hon ble Supreme Court of India has been pleased to refer the issue whether royalty is tax to a Bench of nine-Judges in the matters of Mineral Area Developmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the petitioner for the purpose of restraining the Proper Officer from finalizing assessment. Minute reading of said Order would reveal the following: 9. Following the interim order passed by the Apex Court in the case of M /s Lakhwinder Singh (supra) [Writ Petition (Civil) No.1076 of 2021] dated 04.10.2021, this Court had been pleased to grant interim protection on levy of GST on mining lease/ royalty/DMF. In the background of the legal position that royalty has been considered to be a tax or profit pendre and the issue is pending before the 9 Judge Constitution Bench, we are of the considered view that the petitioners have made out a case for interim protection. As such, there shall be stay of recovery of GST for grant of mining lease/royalty/DMF from the petitioners till further orders. However, the Revenue is not restrained from conducting and completing the assessment proceedings. Since interim protection has been granted earlier in the case of Sunita Ganguly and others Vrs. Union of India others vide order dated 02.03.2021 passed in W.P.(T) No. 3878 of 2020 and other analogous cases on levy of service tax on royalty/DMF, similar interim protection is being grante ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ht to its notice. 5.9. Mr. Tushar Kanti Satapathy, counsel for the petitioner urged that the Hon ble High Court of Andhra Pradesh at Amaravati in the case of Karthika Mines and Minerals Private Limited Vrs. The Assistant Commissioner (ST) and Ors., Writ Petition No.10929 of 2022 and the Hon ble High Court of Meghalaya at Shillong in the case of M/s. Hills Cement Company Limited Vrs. The Union of India Ors., WP(C) No.177 of 2022 have granted interim protection to the assesses against levy of GST on grant of mining lease/payment of royalty and, therefore, he prayed that this Court may follow suit. Perusal of Order dated 19.04.2022 of High Court of Andhra Pradesh in Karthika Mines and Minerals Private Limited Vrs. The Assistant Commissioner (ST) and Ors., Writ Petition No.10929 of 2022 and Order dated 13.05.2022 of High Court of Meghalaya passed in M/s. Hills Cement Company Limited Vrs. The Union of India Ors., WP(C) No.177 of 2022 indicates that the interim protection to the petitioners therein were granted taking into account the interim relief vide Order 04.10.2021 of the Hon ble Supreme Court in the case of Lakhwinder Singh Vrs. Union of India Ors., W.P. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctrine of binding precedent known as stare decisis. We shall deal with the reasons for the same at some length a little later. *** 20. From the foregoing discussion, the following propositions emerge: (a) The law declared by the Supreme Court being binding on all courts in India, the decisions of the Supreme Court are binding on all courts, except, however, the Supreme Court itself which is free to review the same and depart from its earlier opinion if the situation so warrants. What is binding is, of course, the ratio of the decision and not every expression found therein. (b) The decisions of the High Court are binding on the subordinate courts and authorities or Tribunals under its superintendence throughout the territories in relation to which it exercises jurisdiction. It does not extend beyond its territorial jurisdiction. (c) The position in regard to the binding nature of the decisions of a High Court on different Benches of the same court may be summed up as follows: (i) A single judge of a High Court is bound by the decision of another single judge or a Division Bench of the same High Court. It would be judicial impropriety to ignore that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in Commissioner of Income Tax Vrs. Thana Electricity Supply Ltd., (1994) 206 ITR 727 (Bom) and Consolidated Pneumatic Tool Co. (India) Ltd. Vrs. Commissioner of Income Tax, (1994) 209 ITR 277 (Bom), in Geoffrey Manners Co. Ltd. Vrs. Commissioner of Income Tax, (1996) 221 ITR 695 (Bom) it has been observed that the decision of one High Court is neither binding precedent for another High Court nor for Courts or Tribunals outside its own territorial jurisdiction. The decision of a High Court will have the force of binding precedent only in the State or territories on which the Court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court, it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis can judgments of one High Court be given the status of a binding precedent so far as High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed by this Court on certain factors specially in fiscal matters, in subsequent matters on more or less similar facts, there should not be a different order passed nor should there be any variation with that kind of interim order passed. It is submitted at the Bar that such variance creates discrimination. This is an unfortunate approach. Every Bench hearing a matter on the facts and circumstances of each case should have the right to grant interim orders on such terms as it considers fit and proper and if it had granted interim order at one stage, it should have the right to vary or alter such interim orders. We venture to suggest, however, that a consensus should be developed in the matter of interim orders. 60. If we may venture to suggest, in fiscal matters specially in cases involving indirect taxes where normally taxes have been realised from the consumers but have not been paid over to the exchequer or where taxes are to be realised from consumers by the dealers or others who are parties before the court, interim orders staying the payment of such taxes until final disposal of the matters should not be passed. It is a matter of balance of public convenience. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST/OGST Act regard being had to the fact of non-registration of the petitioner who deals in sand (mineral) being allotted with lease of quarry at Mukundapur Baitarani River Sand Quarry vide Sairat Lease Case No.03/2015-16, in terms of the Odisha Minor Minerals Concession Rules, 2016, lease deed in respect of which is stated to have been executed on 30.06.2020. 6. On the challenge being made to Demand-cum-Show Cause Notice dated 17.02.2022 vis-a-vis entertainment of writ petition, it is only to be rejected at the threshold. 6.1. The statutory scheme requires issue of show cause notice by the Adjudicating Authority, response by the person served with the show cause notice and final determination by the order in original. Issue of show cause notice is a condition precedent to raising an enforceable demand. Reference may be had to Commissioner of Central Excise, Vishakhapatnam Vrs. Mehta Co., (2011) 4 SCC 435; Union of India Vrs. Madhumilan Syntex Pvt. Ltd., (1988) 3 SCC 348; Golak Patel Volkart Limited Vrs. Collector of Central Excise, Belgaum (1987) 2 SCC 93. 6.2. In the present writ petition, the Petitioner has challenged Demand-cum- Show Cause Notice under Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exist good grounds to invoke the extraordinary jurisdiction. 12. Constitution Benches of this Court in K.S. Rashid and Son Vrs. Income Tax Investigation Commission [1954 SCR 738 = AIR 1954 SC 207], Sangram Singh Vrs. Election Tribunal, Kotah [(1955) 2 SCR 1 = AIR 1955 SC 425], Union of India Vrs. T.R. Varma [1958 SCR 499 = AIR 1957 SC 882], State of U.P. Vrs. Mohd. Nooh [1958 SCR 595 = AIR 1958 SC 86] and Venkataraman and Co. Vrs. State of Madras [(1966) 2 SCR 229 = AIR 1966 SC 1089] held that Article 226 of the Constitution confers on all the High Courts a very wide power in the matter of issuing writs. However, the remedy of writ is an absolutely discretionary remedy and the High Court has always the discretion to refuse to grant any writ if it is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of principles of natural justice or procedure required for decision has not been adopted. 13. Another Constitution Bench of this Court in State of M.P. Vrs. Bhailal Bhai [(1964) 6 SCR 261 = AIR 1964 SC 1006] held th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SCC 312], Whirlpool Corporation Vrs. Registrar of Trade Marks [(1998) 8 SCC 1 = AIR 1999 SC 22], Tin Plate Co. of India Ltd. Vrs. State of Bihar [(1998) 8 SCC 272 = AIR 1999 SC 74], Sheela Devi Vrs. Jaspal Singh [(1999) 1 SCC 209] and Punjab National Bank Vrs. O.C. Krishnan [(2001) 6 SCC 569] this Court held that where hierarchy of appeals is provided by the statute, the party must exhaust the statutory remedies before resorting to writ jurisdiction. 16. If, as was noted in Ram and Shyam Co. Vrs. State of Haryana [(1985) 3 SCC 267 = AIR 1985 SC 1147] the appeal is from Caesar to Caesar's wife the existence of alternative remedy would be a mirage and an exercise in futility. There are two well-recognized exceptions to the doctrine of exhaustion of statutory remedies. First is when the proceedings are taken before the forum under a provision of law which is ultra vires, it is open to a party aggrieved thereby to move the High Court for quashing the proceedings on the ground that they are incompetent without a party being obliged to wait until those proceedings run their full course. Secondly, the doctrine has no application when the impugned order has been made in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... State of Maharashtra [(2001) 8 SCC 509], Pratap Singh Vrs. State of Haryana [(2002) 7 SCC 484 = 2002 SCC (L S) 1075] and GKN Driveshafts (India) Ltd. Vrs. ITO [(2003) 1 SCC 72].] *** *** *** *** 15. Thus, while it can be said that this Court has recognised some exceptions to the rule of alternative remedy i.e. where the statutory authority has not acted in accordance with the provisions of the enactment in question, or in defiance of the fundamental principles of judicial procedure, or has resorted to invoke the provisions which are repealed, or when an order has been passed in total violation of the principles of natural justice, the proposition laid down in Thansingh Nathmal case [AIR 1964 SC 1419], Titaghur Paper Mills case [Titaghur Paper Mills Co. Ltd. Vrs. State of Orissa, (1983) 2 SCC 433 = 1983 SCC (Tax) 131] and other similar judgments that the High Court will not entertain a petition under Article 226 of the Constitution if an effective alternative remedy is available to the aggrieved person or the statute under which the action complained of has been taken itself contains a mechanism for redressal of grievance still holds the field. Therefore, when a statut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at entertaining writ petition is not proper where alternative remedy under statute is available. When there is a serious dispute with regard to classification of service, the respondents ought to have responded to the show cause notices by placing material in support of their stand but at the same time, there is no reason to approach the High Court questioning the very show cause notices. Further, as held by the High Court, it cannot be said that even from the contents of show cause notices there are no factual disputes. Further, the judgment of this Court in the case of Malladi Drugs Pharma Ltd. Vrs. Union of India, (2020) 12 SCC 808 = 2004 SCC OnLine SC 358 , relied on by the learned senior counsel for the appellants also supports their case where this Court has upheld the judgment of the High Court which refused to interfere at show cause notice stage. 6.7. The Supreme Court of India in South India Tanners Dealers Association Vrs. Deputy Commissioner of Commercial Taxes, (2008) 23 VST 8 (SC) expressed displeasure in entertainment of writ petition against the Show Cause Notice. The Hon ble Supreme Court in the said case laid down the modality for the Authority in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in the case of Collector of Central Excise, Hyderabad Vrs. M/s. Chemphar Drugs and Liniments, Hyderabad, (1989) 2 SCC 127 and in particular, Para-9 thereof is quoted as hereunder: 9. *** In order to make the demand for duty sustainable beyond a period of six months and up to a period of 5 years in view of the proviso to sub-section (1) of Section 11-A of the Act, it has to be established that the duty of excise has not been levied or paid or short-levied or short-paid, or erroneously refunded by reasons of either fraud or collusion or willful misstatement or suppression of facts or contravention of any provision of the Act or Rules made thereunder, with intent to evade payment of duty. Something positive other than mere inaction or failure on the part of the manufacturer or producer or conscious or deliberate withholding of information when the manufacturer knew otherwise, is required before it is saddled with any liability, before (sic beyond) the period of six months. Whether in a particular set of facts and circumstances there was any fraud or collusion or willful misstatement or suppression or contravention of any provision of any Act, is a question of fact depen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rice Mills case [(1973) 3 SCC 171 = 1973 SCC (Tax) 123] of this Court is squarely applicable to the facts of the present case. The expression used in Section 11-E of the Act is that the Commissioner must be satisfied on information or otherwise that the registered dealer has furnished incorrect statement of his turnover or furnished incorrect particulars of his sale in the return. A Show Cause Notice is issued to the dealer with the purpose of informing him that the Department proposes to reopen the assessment because the Commissioner himself is satisfied that the dealer has furnished incorrect statement of his turnover or incorrect particulars of his sales in the return submitted, so as to enable the dealer to reply to the show-cause notice as to why the said power vested in the Commissioner should not be exercised. 15. A notice was issued in order to provide an opportunity of natural justice to the dealer. There is nothing in the language of the aforesaid provision which either expressly or impliedly mandates the recording of any reasons. The provision of the Act nowhere postulates that the reasons which led to the issue of the said notice should be incorporated in the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s provisions of Section 11-A of the Act including periods of limitation. It will be difficult to reckon as to from which date the limitation has to be counted. *** 13. It must be noted that while issuing a show-cause notice under Section 11-A of the Act, what is entertained by the Department is only a prima facie view, on the basis of which the show-cause notice is issued. The determination comes only after a response or representation is preferred by the person to whom the show-cause notice is addressed. As a part of his response, the person concerned may present his view point on all possible issues and only thereafter the determination or decision is arrived at. In the present case even before the response could be made by the respondent and the determination could be arrived at, the matter was carried in appeal against the said internal order. The appellant was therefore, justified in submitting that the appeal itself was premature. 6.11. In Union of India Vrs. Bajaj Tempo Ltd., (1998) 9 SCC 281 = 1997 (94) ELT 285 SC = JT 1998 (9) SC 138 it is advised that the appropriate course for the assessee in each case was to reply to the show cause notice enabling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years. 6.14. The present case seems neither to be a case of lack of jurisdiction nor is there any allegation of violation of principles of natural justice. The petitioner has ample opportunity to agitate issue before the Proper Officer. Therefore, this Court feels entertainment of the writ petition at the stage of Demand-cum- Show Cause Notice would be premature. Doing so would frustrate the tax administration and adjudication process. This Court is alive to the fact that the statute under consideration, viz., the CGST/OGST Act(s) and rules framed thereunder provide sufficient safeguard for the assessee-petitioner, more so, when against the final orders of adjudication, appeal lies. 6.15. The learned counsel for the petitioner, Sri Tushar Kanti Satapathy, urged that the petitioner is not required to be registered under the OGST/CGST Act and, thereby she is not required to pay GST on the amount of royalty paid to the Government in respect of quarry lease of sand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an order in Form GST ASMT-15 and summary thereof shall be uploaded electronically in Form GST DRC-07. 6.18. Glance at Annexure-1 which is impugned in the instant writ petition indicates that the Proper Officer has issued Form GST ASMT-14 [Show Cause Notice for assessment under Section 63] and Form GST DRC-01 [Summary of Show Cause Notice]. Annexure to Show Cause Notice in Form GST ASMT-14 as made part of writ petition shows that the Proper Officer enumerated fact and grounds for the proceeding. Thereby, this Court finds compliance of mandate of Rule 100 of the OGST Rules. 6.19. The enquiry/process of assessment requires factual determination with reference to liability and requirement of obtaining registration. Having not found illegality, irrationality, procedural impropriety and proportionality in issue of Demand-cum-Show Cause Notice by the Proper Officer, this Court does not, therefore, deem it expedient to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India, and the petitioner is, therefore, relegated to place appropriate material before the Proper Officer for arriving at just determination of liability. 7. The corollary to the afo ..... X X X X Extracts X X X X X X X X Extracts X X X X
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