Mitambini Mishra VS Union Of India

The petitioner has filed a writ petition challenging the Demand-cum-Show Cause Notice dated 17.02.2022, issued under Section 63 of the Odisha Goods Services Tax Act, 2017 (OGST Act) in Form GST ASMT-14, as per Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules). This notice was accompanied by Form GST DRC-01, as prescribed under Rule 142(1), indicating a demand amounting to Rs. 2,88,706, which includes Tax of Rs. 1,34,318, Interest of Rs. 20,070, and a penalty of Rs. 1,34,318 for the tax periods from 01.04.2020 to 31.03.2021, covering the Financial Year 2020-21. The grounds for the notice include the finding that the petitioner failed to register as required under Section 24(iii) of the OGST Act and did not discharge tax obligations by filing returns in GSTR-1 and GSTR-3B as mandated by Sections 37 and 39 of the Act. The petitioner, engaged in mining and quarrying activities of sand, enjoys leased rights granted by the Government for which it pays royalty. These leased rights are classified under HSN Code 997337 and attract 18% GST under Sl. No. 17(viii) of the Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017.

The petitioner has filed a writ petition to challenge the legitimacy of the Demand-cum-Show Cause Notice dated 17.02.2022, as per Annexure-1, issued under Section 63 of the Odisha Goods and Services Tax Act, 2017 (OGST Act) in Form GST ASMT-14, prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules), which also includes Form GST DRC-01 under Rule 142(1), indicating a demand of Rs.2,88,706/- comprising Tax of Rs.1,34,318/- + Interest of Rs.20,070/- + penalty of Rs.1,34,318/- for the tax periods from 01.04.2020 to 31.03.2021 (Financial Year 2020-21) based on several facts and grounds; the petitioner contends that, upon examination of the registration data pool available with the GSTN, it was found that the noticee had failed to register itself, though liable to be registered under Section 24(iii) of the Act, and also failed to discharge its obligations to pay tax by filing returns in GSTR-1 and GSTR-3B as per Sections 37 and 39 of the Act; the leased rights enjoyed by the noticee for mining and quarrying activities of ‘sand’, granted by the Government with royalty paid to the lessor, are classified under HSN Code 997337 and attract 18% GST under Sl. No.17(viii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, to be paid on a ‘reverse charge’ basis by lessees; the noticee is required to be compulsorily registered as it is liable to pay tax under the OGST/CGST Act; the petitioner argues that since royalty is collected by the Government under the Odisha Minor Minerals Concession Rules, 2016, the impugned imposition on the ‘royalty’ as a ‘service’ is not legally permissible; the petitioner has requested the Hon’ble Court to issue rule nisi directing the opposite parties to justify why the impugned show cause notice should not be quashed, and if the parties fail to show sufficient cause, the rule should be made absolute; furthermore, the petitioner seeks a writ of certiorari to quash the show cause notice and any other appropriate orders in the interest of justice, arguing that royalty is the price for extracting minerals from the land.

The petitioner filed a writ petition to challenge the Demand-cum-Show Cause Notice dated 17.02.2022 issued under Section 63 of the Odisha Goods and Services Tax Act, 2017 (OGST Act) in Form GST ASMT-14 as prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules) This notice included Form GST DRC-01 under Rule 142(1) indicating a demand of Rs.2,88,706/- comprising Tax of Rs.1,34,318/- Interest of Rs.20,070/- and penalty of Rs.1,34,318/- for the tax periods from 01.04.2020 to 31.03.2021 (FY 2020-21) The petitioner argued against the notice on several grounds, including that it failed to register itself under Section 24(iii) of the Act and did not fulfill its tax obligations by filing returns in GSTR-1 and GSTR-3B in accordance with Sections 37 and 39 of the Act The petitioner is involved in mining and quarrying activities of sand for which it pays royalty to the government The leased rights for these activities, covered under HSN Code 997337, attract 18% GST under Notification No.11/2017-Central Tax (Rate) dated 28.06.2017, to be paid on a reverse charge basis by lessees The petitioner contended that the royalty collected by the government under the Odisha Minor Minerals Concession Rules, 2016, should not be treated as a service and thus should not be subject to the impugned tax The petitioner sought a writ of certiorari to quash the show cause notice and any other appropriate reliefs, arguing that royalty represents the state’s share in minerals and does not constitute a service by the state The petitioner cited the Supreme Court’s decision in India Cement Ltd. v. State of Tamil Nadu, where it was held that royalty is a tax and a cess on royalty is beyond the state’s legislative competence, and the decision in Mineral Area Development Authority v. Steel Authority of India, which suggested potential conflicts in precedent and referred the matter to a larger bench The petitioner’s counsel argued that in light of an interim stay on the payment of service tax for mining leases granted by the government, the impugned notice should be quashed.

The petitioner, through a writ petition, questioned the validity of a Demand-cum-Show Cause Notice issued on 17.02.2022 under Section 63 of the Odisha Goods Services Tax Act, 2017 (OGST Act) in Form GST ASMT-14, as prescribed under Rule 100(2) of the Odisha Goods and Services Tax Rules, 2017 (OGST Rules), and included Form GST DRC-01 under Rule 142(1), indicating a demand of Rs. 2,88,706/- (comprising Tax of Rs. 1,34,318/-, Interest of Rs. 20,070/-, and a penalty of Rs. 1,34,318/-) for the tax periods from 01.04.2020 to 31.03.2021. The noticee allegedly failed to register under Section 24(iii) of the Act and to file returns in GSTR-1 and GSTR-3B as required under Sections 37 and 39 of the Act. The petitioner’s counsel argued that the leased rights for mining and quarrying activities of sand granted by the Government, which involved paying royalty to the Government, attracted 18% GST under HSN Code 997337, to be paid on a reverse charge basis by lessees. It was contended that the royalty, collected under the Odisha Minor Minerals Concession Rules, 2016, was not a service and hence, should not be subject to GST. The counsel referred to the Supreme Court’s decision in India Cement Ltd. Vrs. State of Tamil Nadu, which opined that royalty is a tax, and cited the Mineral Area Development Authority Vrs. Steel Authority of India case, noting a conflict between decisions requiring reference to a larger bench. The counsel also referenced interim orders from the Supreme Court staying service tax payment on mining leases and similar orders from other High Courts, requesting similar protection for the petitioner. The learned Additional Standing Counsel for the CT&GST Organisation countered that no demand had yet been raised or finalized, as indicated in the impugned Demand-cum-Show Cause Notice, and called for the petitioner to show cause why the stated tax, interest, and penalty should not be levied.

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