2018 Taxo.online 307
S.B. Civil Writ No. 5354 of 2018 dated 28.08.2018
LADU LAL HIRAN
STATE OF RAJASTHAN
Central Goods and Service Tax Act, 2017
Section 2, 9
Notification No. 13/2017-Central Tax (Rate), dated 28.06.2017.
Dr. Pushpendra Singh Bhati, Justice
In favour of assessee
Represented by: –
Petitioner: – Shri Ravi Bhansali, Dhanesh Sarswat, Vipul Dharnia, Vikas Balia, Himanshu Choudhary, Arvind Shrimali, Vijendra Puri, Khet Singh, Mahaveer Bhanwariya, Shreekant Verma, Rajesh Punia, A. Shrimali, Chain Singh, Amit Vyas, C.S. Bhati, Trilok Joshi, Digvijay Singh & Vijendra Puri
Respondent: – Anil Bhansali, Bhagirath Patel, R.R. Ankiya for Vipul Singhvi, Shri Sanjeet Purohit, Rishabh Tayal for K.L. Thakur
These writ petitions under Article 226 of the Constitution of India have been preferred claiming, in sum and substance, the following reliefs :
“(1) The letter No. P12(52) finance/tax/2017-III, dated 8-11-2017 (Annex. 4) issued by Finance (Tax) Department, Rajasthan Government may kindly be quashed and set aside.
(2) A clarification may be issued to avoid, double burden on the miner/lease holder/end user and suitable amendment in law may be directed to the respondents.
(3) The respondent authorities may be directed to place before the Court the correct position of GST collection on royalty. Further, consequential directions to follow the correct method of GST collection on royalty may also be issued to the respondent authorities.
(4) Any other order, which this Hon’ble Court deems fit and proper in the facts and circumstances of the case, may kindly be passed in favour of the petitioner.
(5) Cost of the writ petition may kindly be allowed in favour of the petitioner.”
2. Precisely, the facts of this case are that the petitioners are engaged in the business activity of mining and are registered lease holders and have lawful mining lease in their favour. The respondent-State is empowered to award the Excess Royalty Collection Contract (ERCC) to the Royalty Contractors. The respondent No. 2 Finance Department, Government of Rajasthan was empowered to authorize Royalty Contractors to collect GST on the amount of royalty collected for and on behalf of the Government.
3. The Royalty Contractors (termed as ERCC Contractors) got appointed by the Government exclusively for collecting the royalty on behalf of the Government from the mining lessee of natural resources without supply of such natural resources.
4. As per the relevant Rule 2(xxiv) of the Rajasthan Minor Mineral Concession Rules, 2017, “Excess Royalty Collection Contract” being defined means that a contract to collect royalty in excess of annual dead rent and any other charges as may be prescribed in the contract, on behalf of the Government for specified mineral dispatched by the mining lease from the area specified in the contract (ERCC), the lessee was to pay fixed amount as installments of the Contract awarded to him by the Government upfront or in installments, and DMFT on actual collection on the basis of his rights to collect the royalty on specified natural resources from a specified territory. The royalty to be collected by a Royalty Contractor on the mining lease from the natural resources ought to be pre-determined and as fixed by the Government.
5. The letter of the Finance Department, Government of Rajasthan to Royalty Contractors became the bone of contention in these writ petitions, as the same entitled the contractor to collect GST @ 18% as forward charges.
6. Learned Counsels for the petitioners submit that the letter issued by the Finance Department, Government of Rajasthan to authorize the contractor to collect the GST on the amount of royalty collected on behalf of the Government was against the provisions of Section 9(3) of CGST Act, 2017 read with Notification No. 13/2017-Central Tax (Rate), dated 28-6-2017.
7. Learned Counsels for the petitioners further pointed out that Section 2(105) of CGST Act, 2017 defines the term “Supplier”, in relation to any goods or services or both, to mean that the person supplying the said goods or services or both, shall include an agent acting on behalf of such supplier in relation to the goods or services or both.
8. However, at this juncture, Learned Counsel for the respondents have taken a stand by filing their respective pleadings that the Royalty Contractor (ERCC Contractor) are being appointed by the Government exclusively for collecting royalty on behalf of the Government from the mining lease holders of natural resources without supply of such natural resources.
9. Learned Counsel for the respondents have further clarified that the royalty paid for mining activities as chargeable under the notification dated 28-6-2017 provides that the lease holders are required to pay the GST under the reverse charge mechanism.
10. It is contended by Learned Counsel for the respondents that lessee/lease holders will continue to submit and follow the existing procedure for filing of GST Returns, and payment of GST under the reverse charge mechanism is according to the provisions of law. It is further contended that the liabilities of lessee/lease holders will not be affected by the amended notification dated 26-7-2018.
11. Once, the reverse charge mechanism itself has not been contested by the respondents and it is an accepted proposition and the same is further supported by the pleadings filed by the respective respondent parties, we do not find any reason to make any further adjudication in the matter.
12. In light of the aforesaid submission and upon such stand of the respondents, the present writ petitions are allowed and the letter dated 8-11-2017 issued by the Finance (Tax) Department, Government of Rajasthan is hereby quashed and set aside. However, if any letter has been issued in pursuance of the letter dated 8-11-2017, the same shall also stand quashed accordingly.