Facts of the Case

Paragon Marmo, a partnership firm, filed a writ petition before the Rajasthan High Court challenging the impugned orders/notices issued by the respondent Department demanding GST on royalty collected from the petitioner. The central grievance was against the levy and demand of GST on royalty.

The Court noted that an identical challenge had already been considered by a Division Bench of the Rajasthan High Court at Jaipur in Sudarshan Lal Gupta vs Union of India & Ors., D.B. Civil Writ Petition No. 8109/2022 and connected matters, decided on 27 September 2022. In that batch of petitions, the challenge to the demand of GST on royalty had been rejected.

Issues Involved

The principal issues arising from the order were:

  1. Whether the orders/notices demanding GST on royalty were liable to be interfered with in writ jurisdiction.
  2. Whether the Court should reconsider the issue despite the coordinate Division Bench decision in Sudarshan Lal Gupta vs Union of India & Ors., which had rejected an identical challenge.
  3. Whether the petitioner’s reliance on State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha, Civil Appeal No. 6492/2002, decided on 17 March 2009, justified a different conclusion.
  4. Whether the pendency of the broader royalty issue before a nine-Judge Bench of the Supreme Court in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., (2011) 4 SCC 450 warranted departure from the existing coordinate-bench view.

Petitioner’s Arguments

The petitioner, through counsel Mr. Paramveer Singh, strongly contended that the writ petition deserved acceptance despite the earlier decision in Sudarshan Lal Gupta vs Union of India & Ors.

The petitioner specifically argued that the Division Bench deciding Sudarshan Lal Gupta had failed to correctly interpret the Supreme Court judgment in State of Assam vs Barak Upatyaka D.U. Karmachari Sanstha, Civil Appeal No. 6492/2002, decided on 17 March 2009. On this basis, the petitioner sought reconsideration of the challenge to the GST demand on royalty.

Respondents’ Arguments

The order records no separate detailed oral submissions on behalf of the respondents, and the appearance column reflects no named counsel for them. Therefore, no independent respondent argument should be attributed beyond the Department’s position implicit in the impugned orders/notices demanding GST on royalty.

The departmental action under challenge proceeded on the basis that GST was demandable on royalty, while the Court also took note of the fact that an identical challenge had already been rejected by a coordinate Division Bench in the Sudarshan Lal Gupta batch of matters.

Court Order / Findings

The Rajasthan High Court declined to take a different view from the coordinate Division Bench that had already rejected the same challenge concerning leviability of GST on royalty.

The Court expressly acknowledged that similar previous judgments had been challenged before the Supreme Court and that the broader issue had not been finally decided by the Supreme Court. It further noted that the matter was pending consideration before a nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors., (2011) 4 SCC 450.

Nevertheless, because a coordinate Bench of the Rajasthan High Court had already rejected the selfsame challenge to the leviability of GST on royalty, the Bench held that it was not inclined to take a different view. The Court found no merit in the writ petition and dismissed it.

Important Clarification

A significant clarification is that this order is a short dismissal order following the coordinate-bench view in Sudarshan Lal Gupta vs Union of India & Ors. It does not contain an elaborate independent determination of every statutory component of GST liability on royalty.

The Court also expressly recognised that the larger controversy had not attained finality before the Supreme Court and was pending before a nine-Judge Bench in Mineral Area Development Authority etc. & Ors. vs M/s Steel Authority of India & Ors. Even so, the Court followed the existing coordinate-bench precedent and refused to adopt a contrary view in the petitioner’s case.

Further, the judgment should not be described as interpreting a particular CGST/RGST section, because the two-page order itself does not expressly mention a specific statutory section. Such an addition would go beyond the text of the order.

Link to download the order - https://mytaxexpert.co.in/uploads/1783502678_1526compressed.pdf

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