Mitambini Mishra VS The Union Of India

In the writ petition, the petitioner challenges the validity of the Demand-cum-Show Cause Notice dated February 17, 2022, as documented in Annexure-1. This notice was issued under Section 63 of the Odisha Goods Services Tax Act, 2017 (OGST Act) and is presented in Form GST ASMT-14, which is prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules). Accompanying this notice is Form GST DRC-01, prescribed under Rule 142(1), which outlines a total demand amounting to Rs. 2,88,706. This demand comprises a tax amount of Rs. 1,34,318, interest of Rs. 20,070, and a penalty of Rs. 1,34,318. The notice pertains to tax periods from April 1, 2020, to March 31, 2021, corresponding to the Financial Year 2020-21. The petitioner raises this challenge based on various facts and grounds.

The petitioner has approached the court by way of a writ petition to challenge the propriety and legality of the Demand-cum-Show Cause Notice dated February 17, 2022. This notice, detailed in Annexure-1, was issued under Section 63 of the Odisha Goods Services Tax Act, 2017 (OGST Act) and presented in Form GST ASMT-14, as prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules). Along with the notice, Form GST DRC-01 was enclosed, as prescribed under Rule 142(1). The demand outlined in these documents totals Rs. 2,88,706, which includes a tax amount of Rs. 1,34,318, interest amounting to Rs. 20,070, and a penalty of Rs. 1,34,318. This demand pertains to tax periods spanning from April 1, 2020, to March 31, 2021, corresponding to the Financial Year 2020-21.

The counsel for the petitioner has contended that the imposition of this demand is impermissible in law. The primary argument hinges on the nature of the “royalty” collected by the Government under the provisions of the Odisha Minor Minerals Concession Rules, 2016. According to the counsel, royalty, in this context, is a fee collected by the Government for granting the right to extract minor minerals. The petitioner asserts that treating this royalty as a “service” subject to Goods and Services Tax (GST) is legally unsustainable. The counsel argues that such an interpretation goes against the fundamental principles of the OGST Act and the associated rules.

Further, the petitioner contends that the imposition of GST on royalty is not supported by any provision in the OGST Act or the OGST Rules. The petitioner maintains that royalty, being a form of governmental revenue, does not constitute a taxable service. Therefore, the demand for tax, interest, and penalty as outlined in the Demand-cum-Show Cause Notice is without legal basis and should be quashed.

In light of these contentions, the petitioner has made the following prayers to the court:

1. To quash the Demand-cum-Show Cause Notice dated February 17, 2022, issued under Section 63 of the OGST Act, and the accompanying Form GST ASMT-14 and Form GST DRC-01.
2. To declare that the collection of royalty under the Odisha Minor Minerals Concession Rules, 2016, does not amount to a “service” under the OGST Act and therefore is not liable to GST.
3. To restrain the respondents from taking any coercive action to recover the demanded tax, interest, and penalty from the petitioner.
4. To grant any other relief deemed appropriate in the circumstances of the case.

By raising these prayers, the petitioner seeks to obtain judicial intervention to prevent what it considers an unlawful and impermissible tax demand by the tax authorities.

In the writ petition, the petitioner challenges the validity of the Demand-cum-Show Cause Notice dated February 17, 2022, as documented in Annexure-1. This notice was issued under Section 63 of the Odisha Goods Services Tax Act, 2017 (OGST Act) and is presented in Form GST ASMT-14, which is prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules). Accompanying this notice is Form GST DRC-01, prescribed under Rule 142(1), which outlines a total demand amounting to Rs. 2,88,706. This demand comprises a tax amount of Rs. 1,34,318, interest of Rs. 20,070, and a penalty of Rs. 1,34,318. The notice pertains to tax periods from April 1, 2020, to March 31, 2021, corresponding to the Financial Year 2020-21. The petitioner raises this challenge based on various facts and grounds.

The counsel for the petitioner contends that the royalty collected by the Government under the provisions of the Odisha Minor Minerals Concession Rules, 2016, should not be treated as a “service” for the purpose of taxation under the OGST Act. They argue that the impugned tax on royalty, treating it as a service, is legally impermissible. The petitioner asserts that royalty represents the State’s share in minerals and does not involve any provision of service by the State.

Mr. Tushar Kanti Satapathy, the learned Advocate for the petitioner, refers to a decision rendered by a seven-Judge Bench of the Hon’ble Supreme Court in the case of India Cement Ltd. v. State of Tamil Nadu, (1990) 1 SCC 12. In this case, the Supreme Court opined that “royalty” is a “tax” and that a cess on royalty, being a tax on royalty, is beyond the competence of the State Legislature. He further cites the Hon’ble Supreme Court’s observation in the case of Mineral Area Development Authority v. Steel Authority of India, (2011) 4 SCC 450, which supports the argument that royalty should not be considered as a service for the purpose of taxation.

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