Himachal Pradesh High Court upholds levy of GST on mining royalty payable under mining concession granted by state

The Himachal Pradesh High Court in the case M/s Lakhwinder Singh Stone Crusher v. Union of India & ors. observed and has dismissed a writ petition challenging notifications issued by the Central government for levy of GST on Royalty paid by a Mineral Concession Holder for mining concession granted by the State.

In the present case, the petitioner is a firm which is being engaged in stone crushing, was issued notices and summons under Section 70 of Central Goods and Services Tax Act, demanding GST on royalty.

However, the petitioner's challenge in the year 2023 was based on a seven-Judge Bench decision of the Supreme Court in the case India Cement Ltd. and ors. vs. State of Tamil Nadu and ors., wherein the court declared that royalty itself is a tax.

The petitioner in the plea argued before the court that any demand for GST on royalty by the respondents would prima facie amount to levying a tax on tax, which should be beyond the legislative.