GST on Mining Lease Amount Paid to Government: Madras HC defers Adjudication for Pending SC’s Royalty Ruling [Read Order]

In a recent ruling, the Madras High Court, considering the decision of this court in another case, deferred the orders of GST ( Goods and Services Tax ) adjudication on GST leviability on Mining Lease amount paid to the government until the Supreme Court Ruling of the Nine-judge bench on nature of Royalty.

P. Saravanan, the assessee has challenged the impugned order levying GST in respect of the mining lease amount paid by the assessee to the Government though the writ petition.

The assessee’s counsel, Mr. V.Sanjeevi cited Notification No. 13/2017 – Central Tax (Rate) concerning the GST claim on mining lease, highlighting that services provided by the Central, State Government, or local authority to a business entity through renting of immovable property are exempt from GST.

Additionally, the counsel referenced interim orders from the Supreme Court, including SLP(C) No. 37326 of 2017, indicating that the Supreme Court has granted an interim stay on both royalty and mining lease matters. It was further noted that a nine-judge bench is scheduled to hear this batch of cases.

Justice Senthilkumar‘s bench noted the Madras High Court division’s decision in A. Venkatachalam v. Assistant Commissioner (ST), Palladam. The bench instructed that upon receiving objections or representations from the writ petitioners, the concerned authority should proceed with adjudication on merits and in accordance with the law, ensuring a fair opportunity for the petitioners to be heard.

However, any GST adjudication orders were to be held in abeyance pending a decision by the Nine Judge Constitution Bench on the nature of royalty. Importantly, it was clarified that no GST recovery on royalty should occur until the Nine Judge Constitution Bench issues its decision. The bench disposed of the case in accordance with the ruling in the A. Venkatachalam v. Assistant Commissioner (ST), Palladam. The assessee was  permitted to submit his reply to the intimation within a maximum period of four weeks from the date of receipt of a copy of this order.

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