Facts of the Case

The petitioner, Shankar Lal, challenged show cause notices/assessment orders issued by the GST Department raising a demand of GST on royalty paid to the Mining Department towards a mining lease. The State's Additional Advocate General submitted that the issue was already settled against similarly placed petitioners by the same High Court's earlier decisions in DB Civil Writ Petition No.5678/2022 (Shree Basant Bhandar Int Udyog vs. UOI & Ors., dated 29.09.2022), which itself relied on DB Civil Writ Petition No.8109/2022 (Sudershan Lal Gupta vs. Union of India & Ors., decided 27.09.2022).

Issues Involved

  1. Whether GST is leviable on royalty paid by a mining lessee to the Mining Department for grant of a mining lease.
  2. Whether the petitioner's challenge was covered by the earlier decisions in Sudershan Lal Gupta and Shree Basant Bhandar Int Udyog.

Petitioner's Arguments

  • The demand of GST on royalty paid to the Mining Department towards the mining lease was challenged as impermissible.

Respondent's Arguments

  • The issue involved was already decided against similarly placed petitioners by the Division Bench in Sudershan Lal Gupta vs. Union of India & Ors. (27.09.2022) and Shree Basant Bhandar Int Udyog vs. UOI & Ors. (29.09.2022), which held that imposition of GST on royalty is not liable to be interfered with.

Court Order / Findings

  • Learned counsel for the petitioner was unable to dispute that the issue regarding demand of GST on royalty paid to the Mining Department towards a mining lease had already been decided in Sudershan Lal Gupta's case and Shree Basant Bhandar Int Udyog's case.
  • The Court dismissed the writ petition in terms of the judgments passed in Sudershan Lal Gupta's case and Shree Basant Bhandar Int Udyog's case, thereby confirming that GST on royalty paid for a mining lease is not liable to be interfered with.

Important Clarification

Where a coordinate Division Bench of the same High Court has already settled, in binding precedent (here, Sudershan Lal Gupta and Shree Basant Bhandar Int Udyog), that GST is validly leviable on royalty paid to a State Mining Department for grant of a mining lease, subsequent identical challenges by other lessees will be dismissed on the strength of that precedent without fresh, independent reasoning.

Sections Involved

  • GST on royalty for mining lease (levy under the Central/Rajasthan Goods and Services Tax Act, 2017, treating royalty as consideration for a taxable service of assignment of the right to use natural resources) – the substantive question settled against the petitioner by the cited precedents.

Decision – In Favour of

The writ petition was dismissed, confirming the GST demand on mining royalty — the outcome favours the Department.

Case Details

Court: High Court of Judicature for Rajasthan at Jodhpur
Case No.: D.B. Civil Writ Petition No. 1830/2023 (CW-1830/2023)
Neutral Citation: 2023/RJJD/017024
Coram: Hon'ble Mr. Justice Vijay Bishnoi and Hon'ble Mr. Justice Yogendra Kumar Purohit
Date of Order: 24.05.2023

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