Himachal Pradesh HC Approves GST Tax on Mining Royalty Payable Under State Granted Mining Concession

Notices and summons were issued to the Petitioner, a firm engaged in stone crushing, demanding GST on the concession fee under Section 70 of the Central Goods and Services Tax Act.

The petitioner’s appeal in 2023 is India Cement Ltd. and ors was based on the decision of a seven-Judge Bench of the Supreme Court. State of Tamil Nadu vs ors. here copyright itself was declared to be a tax.

The plaintiff argued that any claim of GST on the copyright by the defendants would prima facie amount to levy of tax on duty and this must be beyond the legislative power of the defendant authority.

A dividing bench Deputy Chief Justice Tarlok Singh Chauhan and Justice Satyen Vaidya He observed that India Cement Ltd. (supra) was rejected by a nine-judge bench of the Supreme Court. Mine Site Development Authority & anr. etc. M/s Steel Authority of India and Anr. (2024).

In the Mineral District Development case (supra) the Supreme Court held by an 8:1 majority that States have the power to impose taxes on mineral rights. It was also accepted that the Royalty did not qualify as a tax because it was a contractual consideration paid by the lessee to the lessor within the scope of the mining lease agreement.

The Supreme Court said that there is no specific provision in the Mines and Minerals (Development and Regulation) Act, 1957, which imposes limitations on the taxation powers of the State. According to Article 9 of the MMDR Act, copyrights are not taxable. Section 9 MMDR Act does not impose any limitation on the power of States to tax minerals. The limitations imposed by Article 9 on copyrights do not limit the powers of the State.

“Therefore, the defendants are entitled to collect GST on the royalty paid by the mining concessionaire for any mining concession granted by the State.The Supreme Court accepted and dismissed the case.

Appearance: Arvind Sharma, Advocate, for the Petitioner; Dy SGI Balram Sharma along with Advocate Rajeev Sharma for Respondents Nos. 1, 3 and 4; AG Anup Rattan is with Addl. AG Rakesh Dhaulta, Pranay Pratap Singh and Sushant Kaprate, Dy AG Arsh Rattan and Priyanka Chauhan for Respondent No.2

Case title: Ms. Lakhwinder Singh Stone Crusher v. Union of India and ors.

Quote: 2024 LiveLaw (JKL) 72

Case number: CWP No.8637/2023

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