INDEX v. The Union of India

Judgment

#3. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#3. ... ... Petitioner Versus The State of Bihar through the Principal Secretary, Commercial Taxes Department, Government of Bihar. The Principal Secretary cum Commissioner, State Tax, Commercial Taxes Department, Government of Bihar. The Joint Commissioner of State Tax, Shahabad Circle, Ara. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 17077 of 2022 ====================================================== Broad Son Commodities Private Limited a Company incorporated under the provisions of the Companies Act, 1956 having its registered office at Dr. Himanshu Complex, Block Road, Koilwar Chouk, P.S. Koilwar, District Bhojpur (Ara), through its Director Ashok Kumar aged about 67 years (male), son of Ram Chandra Saw, resident of Village/ Mohalla- Pareo, P.S. Bihta, District- Patna. ... ... Petitioner Versus The State of Bihar through the Principal Secretary, Commercial Taxes Department, Government of Bihar. The Principal Secretary cum Commissioner, State Tax, Commercial Taxes Department, Government of Bihar. The Joint Commissioner of State Tax, Shahabad Circle, Ara. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 17078 of 2022 ====================================================== Broad Son Commodities Private Limited a Company incorporated under the provisions of the Companies Act, 1956 having its registered office at Dr. Himanshu Complex, Block Road, Koilwar Chouk, P.S. Koilwar, District Bhojpur (Ara), through its Director Ashok Kumar, aged about 67 years (male), son of Ram Chandra Saw, resident of Village/Mohalla-Pareo, P.S. Bihta, District Patna. ... ... Petitioner Versus The State of Bihar through the Principal Secretary, Commercial Taxes Department, Government of Bihar. The Principal Secretary cum Commissioner, State Tax, Commercial Taxes Department, Government of Bihar. The Joint Commissioner of State Tax, Shahabad Circle, Ara. ====================================================== Civil Writ Jurisdiction Case No. 18535 of 2022 ====================================================== ... ... Respondents Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Broad Son Commodities Private Limited a Company incorporated under the provisions of the Companies Act, 1956 having its registered office at Dr. Himanshu Complex, Block Road, Koilwar Chouk, P.S. Koilwar, District Bhojpur (Ara), through its Director Ashok Kumar, aged about 67 years (male), son of Ram Chandra Saw, resident of Village/Mohalla-Pareo, P.S. Bihta, District Patna. ... ... Petitioner Versus The State of Bihar through the Principal Secretary, Commercial Taxes Department, Government of Bihar. The Principal Secretary cum Commissioner, State Tax, Commercial Taxes Department, Government of Bihar. The Joint Commissioner of State Tax, Shahabad Circle, Ara.

#3. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 9140 of 2023 ====================================================== Singh and Giri Infrastructure Pvt. Ltd. a Private Limited Company incorporated Under the Companies Act, 1956 having its office at Narayanpur, Bagha-845105 through its Director Shri Harendra Singh (Male, aged about 68 Yeats) Son of Late Nagina Singh residing at Ward No.5, Sukhwan Road, Narayanpur, Bagha 02, P.S. Naryanpur, West Champaran, Bihar. ... ... Petitioner

#1. Versus State of Bihar through Commissioner of State Tax, Bihar, Patna Having its Office at Vikas Bhawan, Patna.

#2. Addl. Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur.

#3. Asst. Commissioner of State Tax, Bagaha Circle, Bagaha. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 9162 of 2023 ====================================================== Singh and Giri Infrastructure Pvt. Ltd. A Private Limited Company incorporated under the Companies Act, 1956 having its office at Narayanpur, Bagha- 845105 through its Director Shri. Harendra Singh (Male, aged about 68 years) son of Late Nagina Singh residing at Ward No. 5, Sukhwan Road, Narayanpur, Bagha- 02, P.S.- Naryanpur, West Champaran, Bihar. ... ... Petitioner

#1. Versus The State of Bihar through Commissioner of State Tax, Bihar, Patna having its office at Vikas Bhawan, Patna.

#2. Addl. Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur.

#3. Asst. Commissioner of State Tax, Bagaha Circle, Bagaha. ====================================================== ... ... Respondents Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Civil Writ Jurisdiction Case No. 9947 of 2023 ====================================================== Singh and Giri Infrastructure Pvt. Ltd. a Private Limited Company incorporated under the Companies Act, 1956 having its office at Narayanpur, Bagha-845105 through its Director Shri Harendra Singh, Male, aged about 68 years, son of Late Nagina Singh, residing at Ward No. 5, Sukhwan Road, Narayanpur, Bagha-02, P.S. Naryanpur, West Champaran, Bihar.

#1. Versus State of Bihar through Commissioner of State Tax, Bihar, Patna having its office at Vikas Bhawan, Patna.

#2. Addl. Commissioner of State Tax (Appeal), Tirhut Division, Muzaffarpur.

#3. Asst. Commissioner of State Tax, Bagaha Circle, Bagaha. ... ... Petitioner/s ... ... Respondent/s ====================================================== Civil Writ Jurisdiction Case No. 11538 of 2023 ====================================================== M/s Umesh Kumar (a sole proprietorship firm) having it registered office - Shekhpur, P.S. - Yehaipur, District - Muzaffarpur through its Sole Proprietor Mr. Umesh Kumar, aged about 54 years, S/o Jiyalal Rai. ... ... Petitioner

#4. Versus The Union of India through the Secretary, Ministry of Finance, Department of Revenue, having its office at Room No. 46, North Block, P.O. and P.S. North Block, New Delhi - 110001. The Chief Commissioner, CGST and CX, Office at - C.R Building, 1st Floor, Bir Chand Patel Path, Patna, Bihar. The State of Bihar through Commissioner, BGST, New Secretariat Patna. Joint Commissioner of State Tax, Muzaffarpur East Circle, District - Muzaffarpur, Bihar.

#5. Deputy Commissioner of State Tax, Muzaffarpur East Circle, Muzaffarpur.

#6. Assistant Commissioner of State Tax, Muzaffarpur East Circle, Muzaffarpur.

#7. Additional Commissioner of State Tax (Appeal) Tirhut Division, Muzaffarpur. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 16764 of 2023 ====================================================== M/s Buddha Uttam J.V., a Joint Venture, having its Office at 302, Maya Enclave, Road No.10, Patel Nagar, P.S. Shastri Nagar, Town and District Patna through its Authorized Representative Amit Kumar, Male, Aged about 43 Years son of Sri Vinod Kumar Singh, Resident of 302, Maya Enclave, Road No.10, Patel Nagar, P.S. Shastria Nagar, Town and District Patna. ... ... Petitioner Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#5. Versus The State of Bihar through the Commissioner cum Principal Secretary, Department of Commercial Taxes, Vikash Bhavan, Bailey Road, Patna. The Commissioner cum Principal Secretary, Department of Commercial Taxes, Vikash Bhavan, Bailey Road, Patna. The Principal Secretary, Department of Mines and Geology, Government of Bihar, Vikash Bhavan, Bailey Road, Patna. The Additional Chief Secretary cum Mines Commissioner, Department of Mines and Geology Government of Bihar, Vikash Bhavan, Bailey Road Patna. The Joint Commissioner, State Tax, Sahabad Circle Bhojpur at Arrah. The Collector-cum-District Mining Officer, Bhojpur (Arrah). The Mines Development Officer, District Mining Office, Bhojpur at Arrah. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 17700 of 2023 ====================================================== M/s Mahadev Enclave Pvt. Ltd. a registered company having its registered office at B- 37, Ayodhya Marg, Hanuman Nagar, Jaipur, Rajasthan through its authorised signatory namely Rajendra Singh male aged about 41 years S/o Bahadur Singh R/o Village And Post- Sawnlodha, Ladkhani, Khuribadi, District - Sikar, Rajasthan - 332315. ... ... Petitioner Versus The State of Bihar through the Commissioner, Department of State Taxes, Government of Bihar, Patna. The Additional Chief Secretary, Department of Mines and Geology, Govt. of Bihar, Patna. The Director, Department of Mines and Geology, Govt. of Bihar, Patna. The Joint Commissioner of State Taxes (Incharge), Bhagalpur Circle - 2, Bhagalpur. The Mines Development Officer, Banka. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 18206 of 2023 ====================================================== M/s Maiher Developers a Partnership firm having its Place of Business at First Floor, D-2 MIG, Harmu Housing Colony, P.O. Harmu, District-Ranchi, Jharkhand-834002 through one of its Partners Namely Anil Kumar Singh, Resident of Kumhar Para, Sonwadangal, Dumka, Jharkand -814101. ... ... Petitioner

#1. Versus The State of Bihar through the Commissioner, Department of State Taxes, Government of Bihar, Patna. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#5. The Additional Chief Secretary, Department of Mines and Geology, Govt. of Bihar, Patna. The Director, Department of Mines and Geology, Govt. of Bihar, Patna. The Joint Commissioner of State Taxes (In Charge) Bhagalpur Circle-2, Bhagalpur. The Mines Development Officer, Banka. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 2730 of 2024 ====================================================== M/s Sanjay Kumar, a Proprietorship Firm, Having its Office at Village and P.O. Ekbalganj Nisarpura, P.S. Rani Talab Kampa, District Patna, through its Partner, Sanjay Kumar, aged about 47 Years (Male), Son of Yamuna Singh Yadav, Resident of Village and P.O. Ekbalganj Nisarpura, P.S. Rani Talab Kampa, District- Patna ... ... Petitioner Versus The State of Bihar through the Commissioner, Department of State Taxes, Government of Bihar, Patna. The Additional Commissioner of State Taxes, Patna. The Deputy Commissioner, State Taxes, Danapur Circle-1, Patna. The Additional Chief Secretary, Department of Mines and Geology, Government of Bihar, Patna. The Director, Department of Mines, Bihar, Patna. The District Magistrate, Patna. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 4297 of 2024 ====================================================== Damas Civil Construction India Private Limited a Company incorporated under Companies Act, having its Officer at Ward No.- 18, Near Kaimur Astambh, Belwatia Pokhara, Kaimur, Bhabhua through its Director Mukesh Kumar, aged about 44 years (male), son of Abhiram Sharma, Resident of Village- Bambhai, P.S.- Karpi, District- Arwal. ... ... Petitioner Versus The State of Bihar through the Commissioner, Department of State Taxes, Government of Bihar, Patna. The Additional Commissioner of State Taxes, Patna. The Joint Commissioner, State Taxes, Bhabhua Circle, Bhabhua. The Director, Department of Mines and Geology, Government of Bihar, Patna. The District Magistrate cum Collector, Patna. ... ... Respondents Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 ====================================================== Civil Writ Jurisdiction Case No. 4562 of 2024 ====================================================== Rana Uday Pratap Singh son of Rana Ran Vijay Pratap Singh, Resident of Village Bishunpur Nala, Jaiprakash Nagar, P.S. Dhanbad, District Dhanbad. ... ... Petitioner Versus The State of Bihar through the Commissioner, Department of State Taxes, Government of Bihar, Patna. The Additional Commissioner of State Taxes, Patna. The Joint Commissioner State Taxes, Shahabad Circle, Ara, Bhojpur. The Additional Chief Secretary, Department of Mines and Geology, Government of Bihar, Patna. The Director, Department of Mines and Geology, Government of Bihar, Patna. The District Magistrate cum Collector, Bhojpur. ... ... Respondents ====================================================== Civil Writ Jurisdiction Case No. 6389 of 2024 ====================================================== M/s. Mona Bricks Shahjangi, Mouza Parbatti, Bhagalpur through its proprietor Shah Afroze Hossain @ S. Afroze Hossain (Male), aged about 60 years, son of Shah Mansoor Hussain, resident of Shahjangi, Near Shahjangi Mazar, Habibpur, P.S. Habibpur, District- Bhagalpur. ... ... Petitioner Versus The State of Bihar through the Commissioner State Tax-cum-Principal Secretary, Commercial Taxes Department, Bihar, Patna having its office at Vikas Bhawan, Patna. The Commissioner State Tax-cum Principal Secretary, Commercial Taxes Department, Bihar, Patna having its office at Vikas Bhawan, Patna. The Joint Commissioner State Tax, Bhagalpur Circle- 2, Bhagalpur. The Deputy Commissioner of State Tax, Bhagalpur Circle- 2, Bhagalpur. ... ... Respondents

#4. ====================================================== Appearance : (In Civil Writ Jurisdiction Case No. 3531 of 2022) : For the Petitioner/s

Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Dr. Krishna Nandan Singh, Sr. Advocate Mr. Anshuman Singh, Sr. SC (CGST & CX) Mr. Shivaditya Dhari Sinha, Advocate For the UOI : (In Civil Writ Jurisdiction Case No. 16361 of 2022) Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 For the Petitioner/s : Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr.Vikash Kumar (SC-11) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr.Vikash Kumar (SC-11) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr.Vikash Kumar ( SC-11 ) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr.Vikash Kumar ( SC-11 ) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr.Vikash Kumar (SC-11) Mr. D.V.Pathy, Sr. Advocate Mr. Sadashiv Tiwari, Advocate Mr. Hiresh Karan, Advocate Ms. Shivani Dewalla, Advocate Ms. Prachi Pallavi, Advocate Mr.Vikash Kumar (SC-11) Mr. D.V.Pathy, Sr. Advocate Mr. Sadashiv Tiwari, Advocate Mr. Hiresh Karan, Advocate Ms. Shivani Dewalla, Advocate Ms. Prachi Pallavi, Advocate Mr.Vikash Kumar (SC-11) Mr. D.V.Pathy, Sr. Advocate Mr. Sadashiv Tiwari, Advocate Mr. Hiresh Karan, Advocate For the Respondent/s : (In Civil Writ Jurisdiction Case No. 17070 of 2022) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 17077 of 2022) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 17078 of 2022) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 18535 of 2022) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 9140 of 2023) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 9162 of 2023) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 9947 of 2023) : For the Petitioner/s Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Ms. Shivani Dewalla, Advocate Ms. Prachi Pallavi, Advocate Mr.Vikash Kumar ( SC-11 ) For the Respondent/s : (In Civil Writ Jurisdiction Case No. 11538 of 2023) : For the Petitioner/s For the State For the UOI : : (In Civil Writ Jurisdiction Case No. 16764 of 2023) : For the Petitioner/s Mr. Anurag Saurav, Advocate Mr. Abhishek Kumar, Advocate Ms. Prity Kumary, Advocate Mr. Sharda Raje Singh, Advocate Mr. Ankesh Bibhu, Advocate Mr. Vaibhav Kumar, Advocate Mr. Vivek Prasad, GP-7 Ms. Roona, AC to GP-7 Dr. Krishna Nandan Singh, Sr. Advocate Mr. Anshuman Singh, Sr. SC (CGST & CX) Mr. Shivaditya Dhari Sinha, Advocate Mr. Mohit Agarwal, Advocate Mr. Lokesh Kumar, Advocate Mr. Vikash Khanna, Advocate Mr. Vivek Prasad ( GP 7 ) Ms. Roona, AC to GP-7 For the Respondent/s : (In Civil Writ Jurisdiction Case No. 17700 of 2023) : For the Petitioner/s : For the Respondent/s (In Civil Writ Jurisdiction Case No. 18206 of 2023) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 2730 of 2024) : For the Petitioner/s Mr.Gautam Kumar Kejriwal, Advocate Mr.Standing Counsel ( 11 ) Mr. Gautam Kumar Kejriwal, Advocate Mr. Standing Counsel (11) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr. Standing Counsel (11) Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr. Standing Counsel 11 Mr. Sujit Ghosh, Sr. Advocate Mr. Suraj Samdarshi, Advocate Mr. Avinash Shekhar, Advocate Mr. Vijay Shanker Tiwari, Advocate Ms. Abhilasha Jha, Advocate Ms. Simran Kumari, Advocate Mr. Standing Counsel (11) Mr. Abdul Mannan Khan, Advocate Mr. Binay Kumar, Advocate Mr. Hafiz Shahbaz Arif, Advocate Mr. Vivek Prasad, GP-7 Ms. Roona, AC to GP-7 For the Respondent/s : (In Civil Writ Jurisdiction Case No. 4297 of 2024) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 4562 of 2024) : For the Petitioner/s For the Respondent/s : (In Civil Writ Jurisdiction Case No. 6389 of 2024) : For the Petitioner/s For the Respondent/s : Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 ====================================================== CORAM: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD HONOURABLE MR. JUSTICE SOURENDRA PANDEY CAV JUDGMENT (Per: HONOURABLE MR. JUSTICE RAJEEV RANJAN PRASAD) Date : 18-04-2025 In the present batch of writ applications, the petitioners are raising a common question for consideration. On the request of the parties, the writ applications have been tagged and heard together on various dates. Mr. Sujit Ghosh, learned Senior Advocate, assisted by Mr. Suraj Samdarshi, learned Advocate has led the arguments. CWJC No. 3531 of 2022 has been taken as lead case. This Court would, therefore, refer the prayers and pleadings in the said writ application at first instance. The other learned Advocates for the petitioners have also made their submissions. The main contesting respondent is the State of Bihar. Mr. Vikas Kumar, learned Advocate and Standing Counsel No. 11 for the State has argued the matter at length.

#2. By this common judgment, all the writ applications are being disposed of. In the lead case being CWJC No. 3531 of 2022, the petitioner has prayed for various reliefs. This Court would reproduce the reliefs prayed in the writ application hereinbelow:- Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 “i) To issue an appropriate writ, order or direction in the nature of certiorari for quashing order contained in memo no 341 dated 10.12.2021 passed by Appellate Authority for Advance Ruling, Bihar in Case no. AAAR/01/2021 (Annexure 11) whereby and wherein the appeal of the department against order dated 29.09.2020 passed by the Bihar Authority for Advance Ruling Goods And Service Tax contained in Advance Ruling no. BIH/13AAR/02/2020, has been rejected however the services of the petitioner has been held to be taxable at the rate of 18% (9% CGST+ 9% SGST) during the period 01.07.2017 to 31.12.2018 and at the rate of 18% 18% (9% CGST + 9% SGST) post 01.01.2019, on wholly erroneous grounds and without considering the case of the petitioner. ii) During the pendency of this writ application the Respondents may be directed not to take any coercive steps against the petitioner for recovery of the disputed tax amount. iii) This Hon'ble Court may further adjudicate and hold that the services provided by the State of Bihar to the petitioner by way of grant of mineral concession for winning sand is not leviable with GST in light of the specific exemption granted by Sl no. 64 of notification no 12/2017 dated 28.06.2017 and therefore the petitioner is not liable to pay GST under Reverse Charge Mechanism. iv) This Hon'ble Court may adjudicate and hold that royalty being in the nature of statutory impost is a tax and therefore the same cannot be exigible to further taxation? v) This Hon'ble Court may adjudicate and hold that the grant of mineral concessional is merely a statutory function/duty under provisions of law and therefore would not be exigible to Good and Service Tax. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 vi) This Hon'ble Court may adjudicate and hold that the grant of mineral concessional does not amount of rendition of any service and therefore the same does not attract the levy of Good and Service Tax. vii) This Hon'ble Court may adjudicate and hold that the grant of mining lease does not involve any skill based or performance based activity and thus the same will not attract the levy of Good and Service Tax. viii) This Hon'ble Court may further adjudicate and hold that the expression “assignment of “right to use” any natural resource” would include within its ambit the right to exploit/extract and sell the natural resource ix) This Hon'ble Court may further adjudicate and hold that the order of Appellate Authority for Advance Ruling, Bihar dated 10.12.2021 is bad in law inasmuch as the same has been passed without considering the order contained in memо nо. 8763 dated 22.12.2020 passed by the Commissioner, Central GST and Central Excise, Patna 1, (Annexure 13), which was an order passed in relation to this petitioner with respect to a proceeding initiated under service tax regime, in which the claim of similar exemption under Sl. No. 61 of the Notification nо. 22/2016-ST dated 13.04.2016 was allowed and the proceeding was dropped. x) To grant any other relief or reliefs which the Petitioner may be found entitled to in the facts and circumstances of the case.” Brief Facts of the Case

#3. The petitioner is a company registered under the Companies Act, 1956 (hereinafter called ‘the petitioner-company’ or ‘M/s BSCPL’). It is engaged in taking settlement of the sand ghats in the auction held by the Department of Mines and Geology, Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Government of Bihar. The petitioner-company became the successful bidder for the sand ghats of the district of Patna, Bhojpur and Saran as one unit, Rohtas and Aurangabad as one unit, Jamui and Lakhisarai as one unit and other district as individual units for a period of five years i.e. from 2015 to 2019. A copy of the tender document has been brought on record as Annexure ‘3’ to the writ application.

#4. It is the case of the petitioner that a work order was issued in favour of M/s BSCPL for the district of Patna, Saran and Bhojpur. Yearly agreements were executed between the State of Bihar and the petitioner for the district of Patna and Bhojpur. For Saran, it is stated that the agreements were not executed, rather only yearly work orders were issued. For all the three districts i.e. Patna, Saran and Bhojpur, the auction amount for the year 2015 was Rs. 1,15,31,00,000/- (Rs. 115 crores and 31 lakhs only). The petitioner has given the yearly royalty amount required to be paid by the petitioner for the three districts which are as under:- 2015 2016 2017 2018 2019 Rs. 1,15,31,00,000/- Rs. 1,38,37,20,000/- Rs. 1,66,04,64,000/- Rs. 1,99,25,56,800/- Rs. 2,39,10,68,160/- Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#5. According to the petitioner, under the Sand Policy as contained in Notification No. 2887 dated 22.07.2014, tender document and Letter No. 506 dated 21.10.2014, the State Government had settled the sand ghats for a period of five years. It was clarified that the settlement amount for the said period for five years shall be payable in five equal yearly installments. The yearly settlement amount for the year 2015 shall be the auction amount. It was specified that for the subsequent years, the settlement amount shall be 120% of that of the previous year. The first installment of 50% of the yearly installment amount was to be paid by 15th December of the previous year, 25% was to be paid before 15th April and rest 25% was to be paid before 15th September.

#6. It is the case of the petitioner that at the time of conferment of the right upon the petitioner i.e. 21.12.2014, Bihar Value Added Tax Act, 2005 (hereinafter referred to as the ‘Bihar VAT Act’ or the ‘Act of 2005’) was prevailing and according to the Sand Policy, the petitioner was liable to pay Value Added Tax (in short ‘VAT’) only at the rate of 5%. It is the case of the petitioner that till the promulgation of the Goods and Services Tax Law (hereinafter referred to as the ‘GST’), the petitioner was discharging its tax liability under the Bihar VAT Act. The petitioner discharged its tax liability on the royalty paid to the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Government under Reverse Charge Mechanism (in short ‘RCM’) by paying GST at the rate of 5% (2.5% CGST and 2.5% SGST) under the heading 9973, group 99733 and tariff code 99337 “licensing services for the right to use minerals including its exploration and evaluation” which attracted the same rate of GST as on supply of like goods involving transfer of title in goods.

#7. It is the case of the petitioner that the aforesaid classification of services has been accepted by the Central Board of Indirect Taxes and Customs (In short ‘CBIC’) in its Circular No. 164/20/2021 and GST dated 06.10.2021 in which at paragraph ‘9.3.1’ it has been clarified that supply of service by way of granting mineral exploration and mining rights most appropriately fall under service code 997337. It has also been clarified that for the period 01.07.2017 till 31.12.2018 such services shall attract tax at the rate of 18%.

#8. It is the case of the petitioner that in order to confirm whether the petitioner was rightly discharging its tax liability on royalty paid to the Government under ‘RCM’ at the rate of 5% by classifying the same under residual entry of serial no. 17 of Notification No. 11 of 2017, the petitioner filed an application for advance ruling under Section 97 of the Central Goods and Services Tax Act, 2017 (in short ‘CGST Act’) and Section 97 of the Bihar Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Goods and Services Tax Act, 2017 (in short ‘BGST Act’). The Advance Ruling Authority opined vide order as contained in Memo No. 1517 dated 29.09.2020 that the service received by the petitioner is covered under the Service Accounting Code (In short ‘SAC’) 997337. The Advance Ruling Authority held that the activity undertaken by the applicant attracts 5% GST (2.5% CGST + 2.5% SGST) up to 31.12.2018 and is taxable at the rate of 18% (9% CGST + 9% SGST) from 01.01.2019 onwards under the residual increase of serial no. 17 of the Notification No. 11 of 2017 dated 28.06.2017 as amended by Notification No. 27 of 2018 dated

31.12.2018.

#9. The petitioner challenged the order of the Advance Ruling Authority before this Court in a writ application, the writ was disposed of vide order dated 07.07.2021 with liberty to the petitioner to prefer an appeal before the Appellate Authority for advance ruling. Learned counsel for the petitioner has submitted that the petitioner has not preferred any appeal against the order of Advance Ruling Authority. The order of the Advance Ruling Authority as contained in Memo No. 1517 dated 29.09.2020 has been brought on record as Annexure ‘7’ to the writ application.

#10. It appears that while the petitioner chose not to file an appeal against the order of the Advance Ruling Authority, the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 respondent Joint Commissioner, State Tax Shahabad Circle, Ara preferred an appeal on 24.01.2021 before the Appellate Authority for advance ruling against the order as contained in Annexure ‘7’ to the writ application. It was contended on behalf of the appellant that the service received by the petitioner is covered under SAC 999113 which attracts GST at the rate of 18% from 01.07.2017. It was also contended that if there is any doubt then the service should be covered by heading 9997, other service group 99979 service code 999799 on which GST is payable at the rate of 18%. The appeal was registered as Case No. AAAR/01/2021. A memo of appeal has been enclosed with the writ application as Annexure ‘9’.

#11. It is the case of the petitioner that the petitioner appeared before the Appellate Authority for advance ruling, Bihar and filed its counter affidavit raising all the grounds. The petitioner claimed exemption from levy of GST by virtue of entry at serial no. 64 of Notification No. 12 of 2017 dated 28.06.2017. The petitioner also placed reliance on the order contained in Memo No. 8763 dated 22.12.2020 passed by the Commissioner, Central GST and Central Excise, Patna 1 which was an order passed in relation to this petitioner with respect to a proceeding initiated under service tax regime, in which the claim of similar exemption under Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Serial No. 61 of the Notification No. 22/2017-ST dated 13.04.2016 was allowed and the proceeding was dropped.

#12. Learned counsel for the petitioner has further stated that vide order contained in Memo No. 341 dated 10.12.2021, the Appellate Authority for advance ruling allowed the appeal preferred by the Joint Commissioner, State Taxes/Department. However, the services of the petitioner has been held to be taxable at the rate of 18% (9% CGST+ 9% SGST) during the period

01.07.2017 to 31.12.2018 and at the rate of 18% (9% CGST+ 9% SGST) post 01.01.2019. The claim for exemption by the petitioner has been rejected. A copy of the appellate order of the Appellate Authority for advance ruling, Bihar is Annexure ‘11’ to the writ application which is under challenge in the present writ application. Submissions on behalf of the Petitioner

#13. The contention of the petitioner is that the service of ‘renting or leasing of immovable property/sand ghats’ is rendered by the Government of Bihar in accordance with Section 7 of the CGST Act, it comes within the scope of “supply” as envisaged under the said provision and it is foremost duty of the Government of Bihar to pay the GST amount. The petitioner claims that it is not the liability of the recipient i.e. the petitioner to make payment of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 GST on ‘RCM’ basis, otherwise it would completely defeat the purpose of Section 7 of the CGST/BGST Act, 2017.

#14. It is the contention of the petitioner that no service tax was leviable prior to 2016 on mining royalty/dead rent as the same were in the nature of statutory levies and services provided by the Government in pursuance/performance of their statutory functions. Post the amendments in 2015 and 2016, all services provided by a Government or local authority were brought under the ambit of service tax. By expressly providing that only those services by way of assignment of right to use any natural resource where such right was assigned before 01.04.2016 are exempted from service tax, it has been impliedly provided that any services provided by the government by way of assignment of right to use any natural resource where such right was assigned after

01.04.2016 would be exigible to service tax. It is the case of the petitioner that the mining royalty/dead rent was fixed and determined way back in January 2015, therefore, the incidence of tax has occurred much before coming into force of the GST laws.

#15. Mr. Sujit Ghosh, learned Senior counsel leading the arguments on behalf of the petitioners has formulated his arguments under the following heads:- “A. Assuming arguendo that the grant of mineral concession/mining leases amounts to supply of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 services, the imposition of GST on such a transaction is violative of Article 14 and 19(1)(g); B. Assuming arguendo that the grant of mineral concession/mining leases are not hit by Article 14 and 19(1)(g), the imposition of GST under Article 246A is without jurisdiction, since the power to levy tax on mineral rights is exclusively with the State Government under Entry 50, List II of the Seventh Schedule; C. Assuming arguendo that grant of mineral concession/mining leases entail supply of services for a consideration, such consideration does not comprise only of service fee. Instead, it is a composite charge for regulatory as well as service fee and absent any mechanism to statutorily split these two elements, a charge of GST on the entire sum would be bad in law; D. Assuming arguendo that the entire royalty amount is construed as being towards service fee, then, if the taxable event has taken place prior to coming into force of GST, the State would have no jurisdiction to impose GST on such cases, merely because periodic payment of royalty is made post the commencement of GST; and E. Assuming arguendo that this Hon'ble Court is not persuaded with the proposition enumerated in Para A to D above, then the impugned decision of the Appellate Authority of Advance Ruling is bad in law and accordingly, the decision rendered by the Original Advance Ruling Authority holding that the rate of GST on services falling under SAC 997337 attracts GST at 5% up to 31.12.2018 and 18% from 1.1.2019, should be upheld.” Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 (i) Exclusion from GST – as has been provided to Liquor Industry

#16. In order to support his submissions under (A) above, learned Senior counsel would submit that the present dispute falls within the principles laid down by the Hon’ble Supreme Court in the case of State of Gujarat vs. Shri Ambica Mills Ltd. reported in (1974) 4 SCC 656. Paragraph ‘55’ has been relied upon to submit that under the Constitution of India, equals are required to be treated equally and unless there is an intelligible differentia having a rational nexus with the object of the legislation, classification amongst equals cannot be carried out so as to confer privilege on one set of individuals and to deny such a privilege to other set of individuals falling within the same group. Elaborating the submissions, learned Senior counsel submits that in order to ascertain whether the persons are similarly situated, one must look beyond the classification and into the purpose of the law. Keeping in mind these fundamental principles, there can be no denying that those that are granted mining leases form part of the same class as those that are granted license for carrying on business in alcoholic liquor for human consumption. This is so because in both the cases there is a conferment of permissive privilege to the licence holder/mining lease holder to engage in their respective businesses Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 and absent any conferment of such privilege thereof. If the purpose of the law is to impose GST on services of this nature rendered by the Government, then there can be no manner of doubt that business holding alcohol licences and those who are the holder of mining licences form part of the same class. Further, the fact that they fall within the same class also stands buttressed by the opening paragraphs of the Circular No. 121/40/2019-GST dated

11.10.2019 issued by Ministry of Finance, Department of Revenue. Learned Senior counsel has referred paragraph ‘114’ of the Constitution Bench judgment of the Hon’ble Supreme Court in the case of Mineral Area Development Authority And Anr. Vs. M/s Steel Authority of India and Anr. Etc. reported in (2024) 10 SCC 1 (hereinafter referred to as the ‘MADA Judgment’) where while examining whether royalty is a tax or not in the context of mining leases, the Hon’ble Supreme Court made an observation which in the submission of the petitioner goes to establish the contextual similarity between mining leases and licences for carrying out business in alcohol. It is his submission that even though these two sets of businesses form part of the same class, the State vide Notification No. 25/2019-Central Tax (Rate) dated

30.09.2019 has declared that services by way of grant of alcoholic liquor licence, against consideration in the form of licence fee or Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 application fee or whatever name called is to be treated neither as supply of goods nor as supply of services. The said Notification also explains that the same has been issued to implement the recommendations of the 26th GST Council Meeting where it was recommended that no GST shall be leviable on licence fee/application fee of the aforesaid nature. It is submitted that once a transaction is treated neither as a supply of goods nor a supply of service, the charging section viz Section 9 of the CSGT Act, 2017 would not stand attracted and therefore the authority to impose GST stands denuded. It is pointed out that this Notification was followed by Circular dated 11.10.2019 wherein the Ministry of Finance has recorded that the said is a special dispensation only for supply of services by way of grant of liquor licences by the State Governments as an agreement between the Centre and States and has no applicability or precedence value in relation to grant of other licences and privileges for a fee in other situations, where GST is applicable. It is his submission that a special dispensation/largesse has been conferred on supply of services by way of grant of liquor licences by the State Government and it has expressly been admitted that such a special dispensation is not to be extended to situations such as conferment of mining leases. This, according to the petitioner, itself demonstrates that Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 classification is being sought to be created between individuals who fall within the same class.

#17. Learned Senior counsel for the petitioner admits that the petitioner has no locus standi to challenge the Notification No. 25 of 2019 dated 30.09.2019, nor is the notification under challenge before this Court in this petition. Still, it is submitted that the case of the petitioner, however, is non-consideration of services provided by the Government to itself by way of granting of mining rights/privileges against payment of royalty, from being entitled to the same exclusion from GST as has been provided to the liquor industry. The petitioner relied on the judgement of the Hon’ble Supreme Court in the case of Ayurveda Pharmacy & Anr. v. State of Tamil Nadu reported in (1989) 2 SCC 285 where the Hon’ble Supreme Court had put one of the constituent members of the same class (which were subject to higher rate of sales tax) at par with another constituent of the same class (which was subject to significantly lower rate of tax) and also directed the differential and excess tax paid to be refunded. In that case, the directions were issued by the Hon’ble Supreme Court without disturbing the rate notification which provided lower rate of tax for one of the constituent members. The submission is that the Notification No. 25 of 2019 dated 30.09.2019 is effective from Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

30.09.2019 and, therefore, the mining industry can be put at par with the liquor industry only from that date. However, the petitioner cannot claim any exclusion from GST for the period from 01.01.2017 to 29.09.2019 on this ground alone. (ii) Article 246A, notwithstanding the Non-obstante clause cannot be pressed into service to confer legislative power on the State and the Centre to impost GST.

#18. As regards his submission under (B) of paragraph ‘15’ hereinabove, it is submitted that in terms of Entry 50, List II of the Seventh Schedule of the Constitution of India, the field of legislation in respect of taxes on mineral rights has been exclusively conferred on the States subject to any limitation imposed by Parliament relating to mineral development. This field of legislation relates back to Article 245 read with Article 246, which confers the source of power for enacting legislation in respect of the fields of legislation enumerated in the Seventh Schedule. The legislative competence to impose GST is however, located in Article 246A and it also contains a non-obstante clause seeking to override the provisions of Article 246.

#19. Learned Senior counsel has submitted that conferment of mining licences is essentially an exercise of mineral right and any tax in respect thereof, can be levied only by the State Government and the provisions of Article 246A, notwithstanding Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 the non-obstante clause contained therein, cannot be pressed into service to confer legislative competence on the State and the Centre to impose GST on such transaction. It is submitted that in the MADA judgment several legal issues pertaining to the mining industry were settled by the Hon’ble Supreme Court. Amongst these the expression ‘taxes on mineral rights’ as found in Entry 50 of List II of the Seventh Schedule has been elaborately discussed from paragraph ‘177’ to ‘260’ of the majority judgment. Referring to various paragraphs of the judgment of the Hon’ble Supreme Court in MADA case, the learned Senior counsel has submitted that the natural meaning of the term ‘mineral rights’ will include the entire bundle of rights that follow ownership on minerals, including rights that can be transferred to a lessee through a mining lease. In paragraph ‘189’, the Hon’ble Supreme Court observed that in a situation where the minerals vest with the State by operation of law, the right to those minerals also vests with the State and the State can assign/transfer its mining rights by way of a mining lease to the lessee. In paragraph ‘195’ it has been held that the taxable event under Entry 50 of List II would relate to exercise of mineral rights. In paragraph ‘197’, it was observed that the right to receive royalty is an integral part of the mineral rights of the lessor and that the taxes on mineral rights also take within their Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 fold other aspects relating to the exercise of mineral rights such as working the mines and dispatching of minerals from the leased areas. It is submitted that in paragraph ‘198’ of the MADA judgment, the Hon’ble Supreme Court has held that the taxable event with respect to taxes on mineral rights shall be the exercise of mineral rights and incidence of tax on mineral rights depends upon who is exercising the rights and such a tax can be levied on any person who has an interest in the minerals. It is submitted that the power to levy tax by whatever name called on such arrangement rests only with the State Government in terms of the Entry 50 of List II of the Seventh Schedule. It is this very taxable event that is also being sought be taxed under GST.

#20. Learned Senior counsel points out that on a perusal of paragraph ‘9’ of the Board Circular dated 06.10.2021, it would appear that GST on mining leases is sought to be imposed on services by way of grant of mineral exploration and mining rights in exchange for which the State receives royalty. The Circular at Para ‘9.3.1’ makes a reference to Service Code 997337 as the appropriate classification. The said Service Code refers to licensing service for the right to use minerals including its exploration and evaluation. The crux of these entries inevitably goes to demonstrate that, the lessor in exercise of its mineral rights Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 (one of them being the right to receive royalty and the other being the transfer of mineral rights) recovers such royalty, by execution of lease agreements in exchange of receipts of such royalty. As such therefore, the substance of the transaction (even though it may be termed as grant of mining rights) is intrinsically exercise of mineral right by lessor while making available such grant. It is submitted that although the pith and substance of the two articulations i.e. right to receive royalty and grant of mineral rights is one and the same and consequently if the jurisdiction to levy tax on mineral right falls exclusively within the domain of State Legislature (Entry 50, List 11 Schedule VII) then the same cannot be said to fall within the jurisdiction of Article 246A to impose GST on a concurrent basis.

#21. It is submitted that admittedly Article 246A contains a non-obstante clause which expressly seeks to override the provisions of Article 246. In keeping with this non-obstante clause, a view may emerge that even though power to levy tax on mineral rights may exclusively be with the State Government, however, notwithstanding that power, in terms of Article 246A, the Centre and the State can override such power and impose GST on the very same taxable event i.e. transfer of mineral right, thereby, confirming the legislative competence to impose GST. However, Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 learned Senior counsel for the petitioner submits that this view is required to be eschewed and the integrity and the exclusivity of the State Government to levy tax on mineral rights ought not to be diluted. Relying upon paragraph ‘52’ and ‘53’ of the MADA judgment (supra), it is submitted that in these paragraphs the jurisprudence of fiscal federalism has been set out. It is submitted that in the case of S.R. Bommai v Union of India reported in (1994) 3 SCC 1, it has been held that the Courts should not adopt an approach, an interpretation, which has the effect of or tends to have the effect of whittling down the powers reserved to the States.

#22. It is submitted that if it is held by the Court that there is no exclusivity on the power of the State to levy tax on mineral rights, then Entry 50 of List II of Schedule VII becomes a useless lumber and otiose. It is trite in law that an interpretation that makes an entry/a provision of the Constitution a useless lumber cannot be perpetuated. The Constitution Bench in Calcutta Gas Company vs. State of West Bengal reported in AIR 1962 1044 (paragraph ‘8’) has held that it is well settled rule of interpretation that attempt should be made at harmonising the different entries in the Constitution and to reject the construction which would rob one of the entries of its entire content and make it nugatory. It is submitted that GST is not to be levied on a Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 transaction involving exercise of mineral rights which is manifested by execution of the lease deed, and the only outcome of such a conclusion would be that such exercise of right does not involve any rendition of service and accordingly does not fall within the ken of Article 246A. (iii) Royalty is a hybrid of two constituents i.e. distinction between fee for services and Compensatory fee

#23. To support his submissions under (C) of paragraph ‘15’ hereinabove, learned Senior counsel for the petitioner admits that the argument under this head is predicated on the assumption that there is some element of service that is entailed in a mining lease, in respect of which royalty is paid, however, the entire royalty is not necessarily towards any alleged service. Referring to paragraph ‘130’ of the MADA judgment, it is submitted that their Lordships have held that royalty is a consideration paid by the mining lessee to the lessor for enjoyment of mineral rights and also to compensate for loss of value of minerals suffered by the owner of the minerals.

#24. At paragraph ‘131’, their Lordships have held that Section 9 of Mines and Minerals (Development and Regulation) Act, 1957 (hereinafter referred to as ‘the MMDR Act’) statutorily regulates the right of the lessor to receive consideration in form of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 royalties from the lessee. It is, thus submitted that on perusal of two observations of the Constitution Bench, it may be noticed that the Hon’ble Supreme Court has not said in so many words that royalty is a consideration for rendition of service. Instead, what has been said is that it is a consideration for enjoyment of mineral right, which right of the lessor to receive consideration in the form of royalty is regulated by Section 9 of the MMDR Act.

#25. It is submitted that assuming for argument sake that the act that leads to enjoyment of mineral right is a service and that a part of the royalty relates to such service, then the entire amount of royalty is certainly not towards the enjoyment of this right. This is so because according to the Hon’ble Supreme Court, royalty comprises of another aspect i.e. a compensation for loss of values of minerals suffered by the owner of the minerals. As such, the quantum of royalty is a hybrid of two constituents; one, being for the alleged services and the other being the compensation for loss. It is submitted that the second aspect i.e. compensation for loss of mineral is essentially in the nature of a regulatory fee, to regulate the exploitation of mother earth and to compensate the natural resources of the country, such that, excessive mining leading to depletion of mother nature does not take place at the drop of the hat, and intergenerational equity which requires ensuring fairness Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 and justice in distribution of resources, opportunities and burdens across different generations including the current and the future ones to promote sustainable development is perpetuated. The concept of inter-generational equity and natural resources and public trust doctrine has been pithily summarised by the Hon’ble Supreme Court in the MADA Judgment at paragraphs 59-66. It is his submission that royalty comprises of two parts, one is compensatory in nature i.e. towards the alleged supply of service in the nature of grant of a privilege and the other being a regulatory fee. Relying upon the Constitution Bench judgment of the Hon’ble Supreme Court in the case of Corporation of Calcutta & Anr. v. Liberty Cinema reported in AIR 1965 SC 1107 (paragraph ‘8’), it is submitted that in the said judgment the Hon’ble Supreme Court has drawn a distinction between fee for services and fee for licence and it has been held that imposition of licence fee does not lead to a conclusion that the fee must only be for the services rendered. Learned Senior counsel has relied upon the decision of the Hon’ble Supreme Court in the case of State of Tripura and Ors. vs. Sudhir Ranjan Nath reported in AIR 1997 SC 1168 (paragraph ‘14’ and ‘15’) and the decision in the case of Vam Organic Chemicals Ltd. & Anr. v. State of UP and Ors. reported in (1997) 2 SCC 715. It is submitted that in the case of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 State of Bihar and Ors. vs. Shree Baidyanath Ayurved Bhawan (P) Ltd. & Ors. reported in (2005) 2 SCC 762 in the context of the Bihar Excise Act, the distinction between regulatory fee and compensatory fee was once again reiterated.

#26. It is submitted that power to levy tax under Article 246A is restricted only to supply of goods and services and does not extend to transactions involving loss of mineral, compensation of damages, charges which are regulatory in nature. According to him, power to levy tax is restricted only on the service element. The portion of royalty relatable to enjoyment of mineral right may be a service, whereas, the compensation for loss of minerals read with Section 9 of MMDR Act is a regulatory fee and not fee for services. It is thus submitted that for a valid imposition of tax under Article 265, there should be clarity and certainty in respect to the measure of tax. Relying upon the judgment of the Hon’ble Supreme Court in the case of Govind Saran Ganga Saran v. Commissioner of Sales Tax & Ors. reported at 1985 (Supp) SCC 205 (paragraph ‘5’) it is submitted that in the said judgment it has been held that if the components of taxation (measure of tax, taxable event, rate of tax and the taxable person) are not clearly and definitely ascertainable, it is difficult to say that the levy exists in point of law. Any uncertainty or vagueness in legislative scheme Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 defining any of those components of levy will be fatal to its validity. On the basis of the aforementioned submissions, it is the contention of the petitioner that under the GST regime since there is no machinery provision to dissect the portion of royalty that pertains to supply of service and that which pertains to regulatory fee, the State would have no jurisdiction to levy tax on the entire amount of royalty. It is submitted that in absence of a valuation mechanism the entire value of royalty would be outside the ken of GST notwithstanding that an unalienable portion of such royalty may be towards services. (iv) Taxable event – taking place prior to coming into force of GST on Execution of Agreement

#27. In his next argument in terms of (D) of paragraph ‘15’ hereinabove, learned Senior counsel submits that assuming that the entire royalty amount is construed as being towards service fee, then, if the taxable event has taken place prior to coming into force of GST, the State would have no jurisdiction to impose GST on such cases, merely because periodic payment of royalty is made post the commencement of GST. It is submitted that there are four components that go into taxation namely, taxable person, measure of tax, rate of tax and the taxable event, and if there is vagueness in respect of any of these components then charge of tax cannot be fastened. While this principle is of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 golden vintage and was laid down in the landmark judgment of the Supreme Court in Govind Saran (supra) it has been once again reiterated in the MADA judgment at paragraph ‘192’ of the majority opinion and paragraph ‘10.10’ in the minority judgment, where paragraph ‘6’ of the decision of the Hon’ble Supreme Court in Govind Saran (supra) has been referred to by the Hon’ble Supreme Court. It is submitted that the importance of the fact that taxable event must take place on or after the date when the legislation imposing tax is in force and not prior to that date had come for consideration before the Hon’ble Supreme Court in the case of Collector of Central Excise, Hyderabad vs. Vazir Sultan Tobacco Company Limited reported in 1996 (83) ELT 3 (SC) : (1996) 3 SCC 434. Learned Senior counsel has also relied upon Constitution Bench judgment in the case of 20th Century Finance Corporation Limited & Anr. vs. State of Maharashtra reported in (2000) 6 SCC 12 where the purposes of ascertaining when transfer of right to use any goods (as contemplated under Article 365(29A)(d) takes place, it was observed in paragraph ‘27’ that the transfer of right takes place once a written contract is entered into between the parties and the taxable event would be the execution of contract for the right to use goods. It is submitted that in respect of grant of mineral exploration rights which is manifested by Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 execution of mining lease, the taxable event for transfer of such right would therefore be the date on which the formal contractual arrangement is executed transferring and vesting of such mineral rights from the lessor to the lessee.

#28. It is submitted that in the present case, on

21.10.2014, the petitioner was declared as the highest bidder in respect of auction of sand ghats carried out for a five-year period starting 01.01.2015 to 31.12.2019. Vide letter of even date, the same was communicated to the petitioner directing it to pay 25% of the auction amount of Rs. 115.31 crores within seven days for issuance of an in-principle sanction order. The said in-principle sanction order was issued vide letter dated 06.11.2014 for the district of Patna which clearly mentioned that the period of sanction duration was 2015-2019. Reference to the said sanction order can be found at page no. 138, second paragraph of the writ petition which is a part of the settlement deed. It may be noted that in terms of Rule 7 of the 1972 Bihar Mineral Concession Rules, as also Rule 16 of the 2019 Rules, the duration of mineral concession is to be for five years. Further, the in-principle sanction order is the first step which is followed by issuance of a work order and thereafter execution of the settlement deed. In the 2019 Rules, Rule 29A(1)(b) deals with issuance of an in-principle sanction Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 order, sub-clause (c) thereof deals with the issuance of a work order and Rule 29(2) makes reference to the signing of a deed for a period of five years. It is submitted that in this case, the petitioner made the necessary payments as directed in the letter dated

21.10.2014 and was accordingly issued appropriate work order and thereafter executed the settlement deed on 16.09.2015 in respect of sand ghats of Patna and at or about the same time for the other sand ghats. The petitioner has given the precise settlement amount that was required to be paid by the petitioner for the five calendar years starting 2015. It is his submission that the vestiture of the right to carry out mining activity was conferred on the petitioner as early as in September, 2015 and even prior to that the in-principle sanction order was issued sometime in November, 2014, all of which took place prior to 01.07.2017 i.e. the date of commencement of GST. While admittedly, yearly settlement deeds were executed and there were agreements that were executed post

01.07.2017, however, those executions according to the petitioner were a mere formality since the in-principle sanction order under which the vesting of right took place was issued on 06.11.2014 and even the first agreement for the calendar year 2015 also contemplated that the settlement amounts are to be paid for the five calendar years, thereby binding the petitioner with an Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 obligation to pay the settlement amounts for those five years. Under these circumstances, the petitioner humbly submits that (a) Those settlement deeds which were signed prior to 01.07.2017, the taxable event has taken place pre-commencement of GST (i.e.

01.01.2017), charge of GST on settlement payments made under these agreements cannot be subjected to GST. (b) In respect of those settlement agreements that may have been signed post

01.01.2017, since both the principle sanction orders and the settlement deed for the calendar year 2015 clearly bound down the petitioner with an obligation to pay the settlement amount for the five calendar years clearly indicating the amounts payable for each calendar year, the rights and obligations of the parties stood frozen on that date, which would be in substance the date when the petitioner acquired the right which would have given rise to approaching the writ court for protection of such right. The subsequent execution of the settlement agreements post

01.01.2017 was at best a mere formality since no new rights or obligations were created between the parties. In any case, statutorily in terms of the Rule 7 of the 1972 Rules and Rule 16 of the 2019 Rules, settlement deeds were required for a period of five years thereby clearly laying down the intent of the present statutory contract. It is submitted that upon the end of the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 settlement deed for the calendar year 2019 while fresh agreements were required to be signed, however, the State of Bihar instead of issuing fresh agreements extended the existing agreement from

31.12.2019 to 31.10.2020, and thereafter further extensions were granted up to 30.09.2021. It is his submission that these extensions are not renewal or execution of a new agreement. In law, the term ‘extension’ means continuation of an existing arrangement and therefore, if under the original agreement, the taxable event took place prior to the commencement of GST then such extension cannot be said to trigger a new taxable event. To demonstrate the distinction between the word ‘extension’ and ‘renewal’, learned Senior counsel has cited the judgment of the Hon’ble Supreme Court in the case of Provash Chandra Dalui vs. Bisawanath Banerjee reported in 1989 Supp (1) SCC 487 (paragraph ‘14’).

#29. Learned Senior counsel for the petitioner has further advanced his submissions as formulated under (E) of paragraph ‘15’ hereinabove. It is submitted that even if this Hon’ble Court is not persuaded with the proposition as enumerated in paragraph ‘A’ to ‘D’ above, then the impugned decision of the appellate authority of advance ruling is bad in law and accordingly, the decision rendered by the original Advance Ruling Authority holding the rate of GST on services falling under SAC 997337 Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 attracts GST at 5% up to 31.12.2018 and 18% from 01.01.2019, should be upheld. It is submitted that Advance Ruling Authority categorically held that the petitioner is liable to GST at the rate of 5% up to 31.12.2018 and at the rate of 18% with effect from

01.01.2019 in view of the amendment of the rate Notification No. 27/2018 dated 31.12.2018, w.e.f. 01.01.2019. The authority has held in paragraph ‘12.4’ that after meticulous examination of service accounting code, it was found that the nature of service received by the petitioner is covered under the service accounting code 997337 i.e. licencing services for right to use minerals, including their exploration and evaluation.

#30. It is submitted that the petitioner did not file an appeal against the said order, the Revenue filed an appeal before the appellate authority of advance ruling. On perusal of grounds of appeal set out in the appeal memo, it can be seen that the only ground of the appeal was qua the correctness of service accounting code applicable to the petitioner which was held by the original authority to fall under 997337. In specific terms, the Revenue in its appeal memo had contended that the correct service accounting code should be 999113 and if there is any doubt then the correct classification should be 999799. Vide the impugned order dated

10.12.2021, the appellate authority upheld the classification as Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 held by the original authority i.e. 997337. To that extent, such an affirmation was against the appellant revenue’s contention. However, in breach of the basic propriety of an appellate authority’s jurisdiction, it travelled beyond the scope of appeal by holding that rate of GST payable would be 18% with effect from

01.01.2017 and for that purposes reliance was placed on a circular of the Board dated 06.10.2021 where at paragraph ‘9.3’, the Board had clarified that the intention of the Government has always been to tax the activity at a standard rate of 18%.

#31. It is submitted that the appellate authority has recorded an erroneous finding on merits as well as in law. In paragraph ‘8.2’ of the impugned appellate order, the appellate authority holds that the petitioner’s case does not involve any assignment of any right to use any natural resources since the activity of the petitioner in no way involves using the sand extracted by it and instead parts with sand extracted. Thereafter, at paragraph ‘8.3’ it went to hold that in the petitioner’s case what actually transpires between the Government and the petitioner is the grant of a licence by the Government whereunder the petitioner is entitled to explore/extract sand and sell the sand as opposed to using the sand and the arrangement does not involve assigning the right to use sand. It is submitted that these findings are not only Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 perverse but also in the teeth of the very classification 997337 that it has affirmed. It is submitted that the rate of tax necessarily would be governed by the rate notification and not by any administrative instruction. In the realm of taxation, levy of tax cannot be fastened through administrative circular. Reference in this context is placed on the decision of the Hon’ble Supreme Court in Punit Rai vs. Dinesh Chaudhary reported in (2003) 8 SCC 204 where in paragraph ‘42’ it has been clearly laid out that a circular/letter being an administrative instruction is not law within the meaning of Article 13. In Harivansh Lal Mehra vs. State of Maharashtra reported in (1971) 2 SCC 54 (paragraph ‘6’), it has been clearly held that no tax can be levied through circular. It is submitted that vide Notification No. 27/2018 dated 31.12.2018 with effect from 01.01.2019, Entry 17 of the earlier notification stood amended and the residuary category was made subject to a rate of tax of 9% CGST (cumulative GST being 18% comprising of CSGT and SGST).

#32. It is submitted that during the course of the hearing, this Court had raised a query on whether the petitioner not having filed an appeal against the original order of advance ruling and having thus accepted the rate of 5% and 18% respectively can be permitted to agitate at this stage that these activities are not at all Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 taxable, before a writ court. In response to the pointed query, the petitioner had submitted that the grounds on which the non- taxability was canvassed before the Court are aspects which go to the jurisdiction of the legislatures to levy GST and are also pure questions of law. Reliance has been placed on the recent judgment of Hon’ble Supreme Court in the case of Raju Ramsing Vasave vs. Mahesh Deorao Bhivapurkar reported in (2008) 9 SCC 54 where in paragraph ‘32’ the Hon’ble Supreme Court had categorically held that the principle of res judicata though undoubted is a salutary principle, the said principle however amongst other has some exceptions, for example (i) when judgment is passed is without jurisdiction, (ii) a matter involves pure question of law or (iii) when judgment has been obtained by committing fraud on court. The petitioner also relied upon Constitution Bench judgment in Basheshar Nath vs. Commissioner of Income Tax, Delhi reported in AIR 1959 SC 149 (paragraph ‘15’ and ‘19’). Reliance has also been placed on the judgment of the Hon’ble Supreme Court in the case of Olga Tellis and Ors. vs. Bombay Municipal Corporation and Ors. reported in (1985) 3 SCC 545 where at paragraph ‘28’ and ‘29’ it has been held that doctrine of acquiesce or waiver cannot apply Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 where the issue involved pertains to violation of Article 14 and 19(1)(g). Submissions on behalf of the State

#33. Mr. Vikash Kumar, learned Standing Counsel-11 has opposed the submissions of the learned Senior Counsel for the writ petitioners. Learned counsel has adopted the stand of the State as disclosed in the counter affidavit filed in CWJC No. 18206 of 2023, in all these writ applications. It is submitted that earlier during ‘VAT’ there was a provision for periodic payment of advance tax. If the settlee fails to pay ‘VAT’ in advance, he would have been liable to be declared defaulter and ineligible for extension of settlement agreement. In post GST era, the incidence of settlement of sand ghat and sale of sand are taxable. Settlement of sand ghat is supply of service where Government is supplier and the settlee is recipient of supply. GST has been introduced across the country. For implementing this new tax system with effect from 1st of July, 2017, seventeen different indirect taxes of the Centre as well as States have been subsumed and the Central and State Governments have been empowered to levy and collect tax on supply of goods and services simultaneously. The present is entirely a new tax regime and for implementing this tax system, several amendments were made in the Constitution of India itself Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 through the 101st Constitutional Amendment Act, 2016. In the Constitution itself, a very broad and comprehensive definition of “services” was introduced under Article 306 of the Constitution of India. Clause 26A was inserted after Clause 26 of Article 366 which defines the word “services” means anything other than goods; In line with the spirit of the Constitution, GST Act also defines “services” means anything other than goods, money and securities but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. It is submitted that on going through the definition of services given under the Constitution as well as the GST Act, it is very clear that the definition of ‘Services’ is very broad. At the same time, going through the definition of the word “consideration” under the GST Act it would appear that any activity of awarding license for sand mining comes under the category of service and payment of settlement amount is the consideration against that service.

#34. It is submitted that the mining lease executed is nothing but a contract to undertake mining operations in the leased mining area. The settlement amount paid by the settlee to the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Government is nothing but a “consideration” to have mining operations in the leased area on execution of a mining lease. It is a part of agreement arrived between the parties to have lease of a mining area for undertaking mining operations. The settlement amount being consideration certainly places assignment of right to use natural resources deposited in the leased area as a service as any activity carried out by a person for another for consideration is a service.

#35. The stand of the respondent department regarding its taxability is substantiated by the scope of supply under Section 7 of GST Act and scheme of classification of services wherein it is clearly visible that this activity not only comes under the category of service but is also a service taxable at 18%. Learned counsel has referred Section 7 and the scheme of classification which is Annexure ‘R/2’ to the counter affidavit.

#36. Learned counsel submits recommendation of the GST Council, Circular No. 164/20/2021- GST dated 6th October, 2021 has been issued. It has been clarified that even if the rate schedule did not specifically mention the rate of taxation on service by way of grant of mining rights, during the period 01.07.2017 to 31.12.2018, it was taxable at 18% in view of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 principle laid down in the 14th meeting of the Council for residuary GST rate. Post 1st January, 2019, no dispute remains.

#37. It is submitted that the consideration received as settlement amount for the right to use minerals including its exploration and evaluation as per the Notification No.11/2017- CT (rate) dated 28.06.2017 as amended and included in sub-heading 997337 attracts GST rate at 18% (9% CGST and 9% SGST) on reverse charge mechanism basis as stipulated in Section 2(98) of BGST/CGST Act, 2017.

#38. It is submitted that since the supply of services by the government to a business entity located in the taxable territory are covered under serial no. 5 of the Notification No. 13/2017- central tax dated 28.06.2017 the liability to pay the tax gets transformed to the recipient of such services under Reverse Charge Mechanism as the services for right to use minerals including exploration and evaluation are provided by the Government of Bihar to the business entity. It is submitted that the settlement amount is itself a tax or not is irrelevant in this context because as per Section 15 (2) of the CGST/SGST Act, value of taxable supply shall include any taxes, duties, cesses, fees and charges levied under any law the time being in force other than GST Act. The relevant provision is sub-section (2) which states that the value of Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 supply shall include any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation of States) Act, if charged separately by the supplier. It is his submission that from all these provisions, it would be established that the activity of awarding license to mine sand by the Mines Department is not only a service but is also a service taxable at the rate of 18% under GST. The submissions of learned Standing Counsel-11 for the State have been summarised in paragraph ‘16’ of the counter affidavit which we quote hereunder for a ready reference:- “16. That from the submission made hereinabove it is clear that- i. The taxable event in GST is "supply" of goods or services or both. ii. As per the provision of Section-7 of CGST/GST Act, 2017 license, rental or lease covered within the meaning of "supply" iii. Scheme of Classification of services and rate of tax on different types of services notified vide Notification No.11/2017 CT(rate) dt. 28/06/2017 iv. As per the annexure appended with the above notification, Leasing services have been classified under entry no.257 under Group No.99733 and sub Heading 997337 which are as follows… v. "Licensing services for the right to use minerals including its exploration and evaluation." Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 vi. Settlement amount paid by the Settlee (of sand ghats) to the government is nothing but an amount paid for getting right to use the minerals granted to it for a specified period as per term of lease. vii. As per above explanation leasing /settlement of Sand Ghats covered at Sr. no. 17of Notification no.11/2017 CT(Rate) dt. 28/06/2017. viii. Since description of services under serial no. 17 (i) to vii (a) does not cover such services therefore, it would fall under the residual entry at sr. no. 17(viii). a. Rate of tax on the services classified under entry no.17(viii) of the Notification No.11/2017 CT(Rate) dt. 28/06/2017 is notified as 18% (9% CGST & 9% SGST) [Substituted vide Notification No.27/2018 dt. 31/12/2018] ix. Liability of such tax is to be discharged by the recipient under Reverse Charge Basis (RCM) if supplier of the service is government. (Ref. Sr.no.5 of Notification No.13/2017 CT (Rate) dt. 28/06/2017] x. Thus, in the light of the above provisions Settlees are required to pay GST @ 18% on the entire settlement amount paid to the government on Reverse Charge Basis. xi. GST Paid on such lease rent will be eligible for ITC as it does not covered in the list of blocked credit u/s.17(5).”

#39. Learned counsel submits that the petitioner has placed reliance on Section 9 of the MMDR Act but as per the provision of Section 14 of MMDR Act, Section 9 is not applicable in the case of Minor Minerals.

#40. It is further submitted that before introduction of the GST Act i.e. prior to 1st July, 2017 VAT Act was completely independent of service tax Act. As per Section 9(3) of the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 CGST/SGST Act, the petitioner is liable to pay taxes on services received by him.

#41. It is submitted that appellate authority on advance ruling of Bihar and Orissa clearly establish the fact that the activity of awarding license to mine sand by the Mines Department is not only a service but is also a service taxable at the rate of 18% under GST. Petitioner has mentioned some of the orders of Hon’ble High Courts wherein interim stay has been granted on the payment of GST for grant of mining lease. However, it is pertinent to mention that the Hon’ble Apex Court has already dismissed the various petitions including one of M/s Lakhwinder Singh (supra). It is submitted that the tender document itself says that the settlee have to pay the amount of the GST as per the applicable rate. It means that the taxpayer (petitioner), by participating in the tender, has already accepted the applicability of GST liability on the said transaction.

#42. In course of argument, learned Standing Counsel-11 has submitted that so far as the scope of the present writ applications are concerned, it is liable to be restricted to the issues raised by the petitioner before the Advance Ruling Authority. The petitioner itself admits in paragraph ‘16’ of the writ application that the petitioner under bona fide advise discharged its tax Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 liability on the royalty paid to the Government under reserve charge mechanism by paying GST at the rate of 5% (2.5% CGST and 2.5% SGST) under the heading 9973, group 99733 and tariff code 997337 “Licensing services for the right to use minerals including its exploration and evaluation.” The only issue which was raised by the petitioner before the Advance Ruling Authority was with regard to the rate and whether the petitioner was rightly discharging its tax liability of royalty paid to the government under ‘RCM’ at the rate of 5%.

#43. It is submitted that the petitioner did not raise any grievance before the appellate authority for advance ruling against the order of the Advance Ruling Authority. It was the Department who had gone to the appellate authority. It would appear from the submissions of the writ petitioner made before the Advance Ruling Authority recorded in the order (Annexure ‘7’) that before the Advance Ruling Authority, the petitioner never contended that the GST would not be payable on the royalty or that they would be entitled for exemption under serial no. 64 of the Notification No. 12/2017 dated 28.06.2017. It is submitted that in the counter affidavit filed before the appellate authority for advance ruling, the petitioner has categorically stated in paragraph ‘9’ of its counter affidavit that “since the classification of the services being Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 received by the respondent is now settled, the dispute in the instant appeal remains only regarding the rate of tax for the disputed period i.e. from 01.07.2017 to 31.12.2018 and also from

01.01.2019 onwards.”

#44. It is pointed out that before the appellate authority for advance ruling, the petitioner did not raise any contention with regard to the taxability of the amount paid on account of royalty, though the petitioner contended that it would be entitled for exemption under serial no. 64 of the Notification No. 12 of 2017 dated 28.06.2017. The submission of the petitioner before the appellate authority that it would not be liable to pay any GST on the royalty paid to the State of Bihar for the disputed period i.e. from 01.07.2017 till 31.12.2018 and even thereafter is based on the contention that the rate of GST mentioned in Circular No. 164/20/2021-GST dated 06.10.2021 for the period 01.07.2017 to

31.12.2018 shall not apply to the respondent because the settlement for the entire five years was finalised on 21.10.2014 after issuance of the in-principle approval which is much before

01.04.2016 and the settlement amount for the entire period of five years was decided after culmination of the auction and issuance of the in-principle work order. It is submitted that such a contention was not open to the petitioner by way of submissions in the Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 counter affidavit on the face of the fact that the petitioner had moved the Advance Ruling Authority only on the point of classification and rate of tax applicable in case of the petitioner.

#45. Learned counsel has further submitted that most of the submissions of Mr. Sujit Ghosh, learned Senior counsel with regard to the taxability under the GST regime are only the repetitions of the submissions made before the Hon’ble Supreme Court in MADA case. Learned counsel has taken this Court through paragraph ‘508’ of the judgment in MADA case to submit that the views expressed in the said paragraph is the minority view and this is not the view of the majority. Learned counsel has taken this Court through paragraph ‘135’ to ‘137’ and paragraph ‘365’ of the MADA judgment. It is submitted that the judgment of the Hon’ble Supreme Court in the case of 20th Century Finance Corpn. Ltd (supra) has nothing to do with the grant of mining rights. This case is related to the Finance Act. In the present case, the only issue is the classification issue. The petitioners were already making payment under the Bihar VAT Act and thereafter under the GST Act. Under Bihar VAT Act, 5% was payable as advance tax which they were paying.

#46. Learned counsel submits that GST is payable on settlement amount. It is payable with payment of every installment Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 of the settlement amount and in case where royalty on extracted quantity of sand which is more than the settlement amount, then the settlee shall be liable to pay additional settlement amount. The settlement amount is the consideration. Learned counsel submits that from the order of the Advance Ruling Authority, (Annexure ‘4’) it would appear that the petitioner agreed to deposit GST liabilities in accordance with the updated notification. The appellate authority has also upheld the classification in the same category i.e. 997337 but rightly relied upon the GST Council recommendation. The GST Council has been given a constitutional status. In this regard, learned counsel has relied upon the judgment of this Court in case of M/s Barhonia Engicon Private Limited and Ors. vs. The State of Bihar and Ors. (CWJC No. 4180 of 2024).

#47. Learned counsel submits that the petitioner has not argued on ‘exemption’ because the Notification No. 12 of 2017- Central Tax dated 28.06.2017 in (Annexure ‘14’), service code 64 talks of exemption on tax payable on one-time charge whereas the petitioner is paying the settlement amount in installments. Rejoinder on behalf of the Petitioners

#48. Learned Senior counsel for the petitioner has responded to the contention of the learned Standing Counsel-11. It Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 is submitted that the contention of learned Standing Counsel-11 saying that the petitioner has accepted its liability to pay tax on the services rendered by the State Government and that advance ruling was sought only to the extent of a rate of tax, is only trying to persuade this Court to reject the petitioner’s contention on the very jurisdiction to levy GST on the transactions in question and to foreclose it from agitating violations of Article 14 and 19(1)(g) and other constitutional restriction that apply on State’s Jurisdiction to levy GST. Learned counsel submits that principles of res judicata would not apply to the present case where issues of jurisdiction exists and also where it involves a pure question of law.

#49. Learned counsel further submits that learned Standing Counsel for the State has sought to distinguish the argument of the petitioner qua royalty in the context of GST by saying that it would not be applicable to the settlement amounts which is a distinct concept. It is submitted that the MMDR Act, 1957 was enacted by the Parliament in exercise of the regulatory power conferred on the Central Government under Entry 54 of List I. Section 4 thereof, specifically prohibits any person from undertaking any mining operation without appropriate mining lease granted under the Act. It is submitted that while Section 9 contemplates payment of royalty in respect of mining leases, in Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 terms of Section 14 it has been provided that, even though Section 4 applies to minor minerals, Sections 5-13 inter alia includes Section 9 pertains to royalty would not apply to minor minerals. In fact, Section 15 confers powers on the State Government to make rules in respect of minor minerals. Pursuant to that power at present Bihar Minerals (Concession, Prevention of Illegal Mining, Transportation & Storage) Rules, 2019 (hereinafter called the ‘2019 Rules’) are in force, though earlier the 1972 Rules used to prevail. In the said Rules, in Rule 2(xvi), the term ‘mining concession’ has been defined to mean mining lease or settlement in respect of minor minerals and includes quarrying permits permitting the mining of minor minerals.

#50. The term 'mineral concession holder/ settlee/ lessee has been defined in Rule 2(xvii) to mean a person holding a valid mineral concession for quarrying sand and other minor minerals from the settled/leasehold areas. Rule 2 (xxvi) defines the term ‘settlement’ to mean the mining right given on behalf of the government to quarry, win, work and carry away sand and other minor minerals through a competitive bidding process. Rule 11 of the said Rules echoes the same principle as provided in Section 4 of the MMDR Act inasmuch as that no person can undertake any mining operation except under and in accordance with the terms Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 and conditions of the mining lease. Chapter V of the said 2019 Rules provides for the concept of settlement of sand and Rule 29A provides for a mode of settlement through public auction and thereafter issuance of an in-principle sanction order, followed by an issuance of work order. As per Rule 29B(2), the successful bidder is awarded the concession to mine sand for a period of five years and the parties are required to execute a settlement deed in a prescribed statutory format (Form B). Rule 29B(3) provides for the mode of payment of royalty and settlement amount according to which a settlee shall make the payment of the settlement amount in terms of the bid and any excess mineral extracted beyond the annual settlement amount, the lessee is required to pay an additional royalty in respect of additional quantity as extracted in addition to the settlement amount. Chapter XII deals with mining revenue and as per Rule 51 thereof, once a mineral concession is granted apart from surface rent and debt rent, royalty is required to be charged at the rates specified in Schedule IIIA. Further, Rule 51(5) provides that notwithstanding anything contained in any instrument of lease, the mineral concession holder shall pay rent/royalty in respect of any minor mineral owned, extracted at rates specified from time-to-time under Schedule II and IIIA. It is submitted that on perusal of Schedule IIIA referred to in Rule Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 51(1)(b), the rate of royalty for sand from auctioned ghats have been prescribed as the auction amount. Under these circumstances, according to the learned Senior counsel for the petitioner, it goes without saying that the settlement amount is nothing but a royalty both in substance as also in terms of specific language that can be discerned from Rule 51 read with Rule 51(4) and other rules alluded to in the preceding paragraphs.

#51. Learned Senior counsel further contested the submission of the State that since the royalty for each year was increased by 20% in respect of which the State executed yearly agreements, it cannot be said that the assignment was for 5 years.

#52. As regards the submission of learned Standing Counsel for the State that the petitioner has built its central argument on the basis of the minority judgment in the MADA case, it is submitted that the State are wholly in error in making such submission. Since the petitioner has relied upon the specific para forming part of majority view of the Court which starts from paragraph ‘1’ and ends at paragraph ‘343’ whereas the minority decision starts at paragraph ‘1.1’ and ends at paragraph ‘44’. The only place where the minority decision was referred to was to assist the Court in appreciating the law laid down by the Hon’ble Supreme Court in the case of Govind Saran (supra) in paragraph Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 ‘10.10’ and to that extent there is no divergence between majority and minority view on this aspect. In fact, even at paragraph ‘184’ read with foot note 254 of the majority decision the said judgment has also been referred thereupon.

#53. Learned counsel for the petitioner submits that the contention of the State justifying Notification No. 25/2019 dated

30.09.2019 saying that the recommendations of the GST Council are binding and that on the recommendation of the Council the services by way of grant of alcoholic liquor license was held to be neither supply of goods nor supply of service is unfounded and the same is to be rejected. It is contended that if the recommendations of the GST council was the be-all and end-all for a particular tax dispensation, it would mean that the GST Council, a Constitutional body created under Article 279A, is immune to rigors of Part III of the Constitution and thus exercises an extra-constitutional authority sitting above the Constitution. Such a position cannot be countenanced by any means when it is well known that no authority howsoever high is above the rule of law.

#54. As regards the submission of the State with respect to serial no. 64 of the Notification No. 12/2017 dated 28.06.2017, it is submitted on behalf of the petitioner that the Entry 64 read with the proviso contained therein provided that the service Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 provided by the Government by way of assignment of any right to use natural resources where such right to use was assigned before

01.04.2016 would bear a GST of nil rate. However, the proviso states that the exemption shall apply only to tax payable on a one time charge payable in full upfront or in installments for assignment of right to use in such natural resource. It is submitted that perhaps learned counsel for the State sought to canvass that while the petitioner is exempt from GST, in respect of assignment that took place prior to 01.04.2016, the exemption is restricted to only a one-time charge (whether paid upfront or in installments) but cannot be extended to royalties paid on an intermittent basis during the subsistence of the lease.

#55. It is submitted that there is a fundamental flaw in the State’s submission which essentially is predicated on the basis that apparently, the exercise of jurisdiction to levy tax can be determined by looking at delegated legislation in the form of exemption notifications and if through a delegate legislation exemption has not been accorded to certain aspects, the corollary of that would be that such aspect is taxable. Such an argument of the State is wholly bad in law for it is well known that the aspects of jurisdiction to levy tax inheres under Article 265, other Constitutional restrictions and embargos and also the substantive Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 legalisations enacted therein. It is submitted that in the case of Commissioner Central Excise and Customs, Kerala vs. Larsen and Toubro reported in 2015 (35) GSTR 168 : AIR 2015 SC 3600 (paragraph ‘44’), the Hon’ble Supreme Court had held that were the levy of service tax itself has been found to be non- existent, no question of any exemption would arise.

#56. Dr. K.N. Singh, learned ASG, who is assisted by Mr. Anshuman Singh, learned Senior Standing Counsel, appears for the Union of India. The Union of India has endorsed the submissions of learned SC-11. Consideration

#57. Having heard learned Senior counsel for the petitioners and learned SC-11 for the State as also learned ASG for the Union of India, at first instance, we find that at least six out of eleven writ applications which are under consideration have been filed by M/s BSCPL. M/s ‘BSCPL’ had filed an application under Section 97 of the CGST/BGST Act, 2017 before the Advance Ruling Authority.

#58. Section 97 permits filing of an application for obtaining advance ruling, stating the question as enumerated under Sub-Section (2) of Section 97 on which advance ruling is sought. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 The scope and ambit of Section 97 may be appreciated on going through the said Section which we quote hereunder:- “97. Application for advance ruling. (1) An applicant desirous of obtaining an advance ruling under this Chapter may make an application in such form and manner and accompanied by such fee as may be prescribed, stating the question on which the advance ruling is sought. (2) The question on which the advance ruling is sought under this Act, shall be in respect of,-- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay tax on any goods or services or both; (f) whether applicant is required to be registered; (g) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. This clause provides for form, manner and fee for filing of an application for advance ruling. This clause also lists the nature of questions on which advance ruling can be sought. (Notes on Clauses).” Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Acceptance of Liability to pay GST

#59. In its application, the petitioners/applicants submitted before the authority that they have a lease agreement with the Department of Mines, Bihar Patna vide Letter No. 2961/M dated 31.10.2018 for a period of five years (2015-2019) and vide Letter No. 3391/Mines-Patna dated 28.12.2019. It was extended upto 31.10.2020 for mining of sand. It was contended that the value of lease decided by the Department of Mines, Bihar, Patna is worth Rs. 85,33,72,729/- and this value is enhanced by 50% of the lease value for the extended period. Paragraph ‘7’ of the lease agreement dated 31.12.2018 agrees that the applicants will pay GST applicable at the present rate and the proof of payment shall he submitted to District Mining Office, Patna, paragraph ‘1(ii)’ of Letter No. 3391/Mines, Patna dated 28.12.2019 agrees that the applicant shall deposit GST liability in accordance with the updated notification. Question on which Advance Ruling sought

#60. The petitioners being applicant before the Advance Ruling Authority submitted that they have deposited the tax liability in Government treasury by reverse charge mechanism (‘RCM’) at the same rate of tax as on supply of like goods involving transfer of title in goods. The applicant sought advance Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 ruling on the following question:- “(i) Whether M/s Broad Son Commodities Pvt. Ltd. is rightly discharging the taxable liability @ 5% through reverse charge mechanism?” Order of the Advance Ruling Authority

#61. In the aforementioned background, after hearing learned Advocates for the parties, the concerned authority recorded a finding in paragraph ‘12.3’, ‘12.4’ and ‘12.5’ which are relevant to take note of hereunder for the purpose of this case:- “12.3. The applicant has obtained Government land on lease for mining sand. The leasing of the Government land to the applicant is considered as supply of services, as per subsection (1) of Section 7 of the CGST Act, 2017.

12.4. Regarding the classification of service received by the applicant an annexure to the Notification No.

3.-11/2017- Central Tax (Rate) dated 28.06.2017 has been referred. The annexure attached to the Notification No. 11/2017-Central Tax (Rate) dated

28.06.2017 has defined the Service Accounting Code for each type of services. After meticulous observation of the above mentioned service accounting codes, it has been found that the nature of service received by the application is covered under the Service Accounting Code 9073 37- “licensing services for the right to use minerals including its explorations and evaluation. The Government has been providing the service of licensing services for the right to use minerals after its exploration and evaluation to the applicant and the applicant has to pay a consideration Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 in the form of rent/ royalty to the Government of Bihar for the same.

12.5. The applicability of GST rate for the aforementioned service is based on the classification of service. In the present case, the mining rights so granted are covered under the sub-heading 9973 37 that specifies - Licensing services for the right to use minerals including its exploration and evaluation. We have gone through the notification no. 11/2017 dated 28-6-2017 and the amendments made there under time to time particularly notification no 27/2018 dated 31- 12-2018. We now find that the royalty in respect of mining lease is a part of the consideration payable for the licensing Services for right to use minerals including exploration and evaluation falling under the Head 9973, which is taxable at the rate applicable on supply of like goods involving transfer of title in goods up to 31-12-2018 and thereafter taxable at 9% CGST and 9% SGST from 04-01-2019, under the residual entries of Serial No.17 of the Notification No. 11/2017 Central Tax dated 28.06.2017 as amended by Notification No. 27/2018 Central Tax (Rate) dated 31- 12-2018.”

#62. The Advance Ruling Authority answered the question in the following words:- “The activity undertaken by the applicant attracts 5% GST (2.5%. CGST + 2.5% SGST) upto 31-12.2018 and taxable at the rate of 18% (9% CGST + 9% SGST) from 01.01.2019 onwards under the residual entries of serial no 17 of the Notification No. 11/2017 Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 dated 28-06-2017 as amended by Notification 27/2018 dated 31-12-2018.” Challenge to the Order of Advance Ruling Authority in Writ Jurisdiction

#63. At this stage, it is required to be mentioned that being aggrieved by the order of the Advance Ruling Authority, the petitioner preferred a writ application being CWJC No. 3286 of 2021 in which the following reliefs were prayed for:- “i) the order dated 17.09.2020 (as contained in Annexure -1) passed by the respondent no.1 and 2 under section 98 of the Central Goods and Services Tax Act 2017 (hereinafter called the CGST Act) and Bihar Goods and Services Tax Act, 2017 (hereinafter called BGST Act) classifying mining activity in the nature of licensing services for the right to use minerals including its exploration and evaluation taxable at the rate of 9% CGST and 9% BGST with effect from 01.01.2019 under the residual entries of serial no. 17 of the Notification No.11/2017, Central Tax dated 28.06.2017 as amended by Notification No.27/2018 dated 31.12.2018 Central Tax (Rate) dated 31.12.2018 be quashed. ii) for a declaration that licensing services for the right to use minerals including its exploration and evaluation fall specifically under heading 9973 (licensing or rental services with or without operator) as notified in item 17 of Notification No.11/2017 Central Tax (Rate) dated

28.06.2017 particularly clause (iii) thereof read with the subsequent Notification No.31/2017 Central Tax (Rate) dated 13.10.2017, Notification No.1/2018 Central Tax (Rate) Central Tax (Rate) dated 25.01.2018 and Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Notification No.27/2018 Central Tax (Rate) dated

31.12.2018. iii) for a declaration that classification of mining activity in the nature of licensing services for the right to use minerals including its exploration and evaluation taxable at the rate of 9% CGST and 9% BGST with effect from 01.01.2019 under the residual entries of serial no. 17 of the Notification No.11/2017, Central Tax dated 28.06.2017 as amended by Notification No.27/2018 dated 31.12.2018 Central Tax (Rate) dated 31.12.2018 would only fall under the inverted duty structure and consequently, would be refundable and that levy of tax at higher rates on like goods would be constitutionally imperssible. iv) for granting any other relief (s) to which the petitioner is otherwise found entitled to.”

#64. When the writ application was taken up for consideration, the Hon’ble Court was informed by learned Standing Counsel for the State that the appellate authority under the provisions of the BGST Act, 2017 stands constituted. The writ application was disposed of in the following terms:- “Shri Vikash Kumar, learned Standing Counsel No. 11 invites our attention to the notification dated 21st of September, 2017 whereby the Appellate Authority under the provisions of the Bihar Goods and Services Tax Act, 2017 stands constituted. In this view of the matter, as prayed for by Shri D.V. Pathy, learned counsel for the petitioner, we dispose of the present petition in the following mutually agreeable terms:- (a) The petitioner shall file appeal within a period of eight weeks from today; (b) We accept the statement of the petitioner that ten per cent of the total amount, being condition prerequisite for Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 hearing of the appeal, already stands deposited. If that were so, the appeal shall be decided on merits. However, if the amount is not deposited for whatever reason(s), same shall be done before the next date; (c) This deposit shall be without prejudice to the respective rights and contention of the parties and subject to the order passed by the Appellate Authority. However, if it is ultimately found that the petitioner’s deposit is in excess, the same shall be refunded within two months from the date of passing of the order; (d) We also direct for de-freezing/de-attaching of the bank account(s) of the writ-petitioner, if attached in reference to the proceedings, subject matter of present petition. This shall be done immediately. (e) The Appellate Authority shall condone the delay, if any, in filing the appeal and decide the appeal on merits after complying with the principles of natural justice; (f) Opportunity of hearing shall be afforded to the parties to place on record all essential documents and materials, if so required and desired; (g) During pendency of the appeal, no coercive steps shall be taken against the petitioner. (h) The Appellate Authority shall pass a fresh order only after affording adequate opportunity to all concerned, including the writ petitioner; (i) Petitioner through learned counsel undertakes to fully cooperate in such proceedings and not take unnecessary adjournment; (j) The Appellate Authority shall decide the appeal on merits expeditiously, preferably within a period of two months from the date of filing of the appeal; (k) The Appellate Authority shall pass a speaking order assigning reasons, copy whereof shall be supplied to the parties; Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 (l) Liberty reserved to the petitioner to challenge the order, if required and desired; (m) Equally, liberty reserved to the parties to take recourse to such other remedies as are otherwise available in accordance with law; (n) We are hopeful that as and when petitioner takes recourse to such remedies, before the appropriate forum, the same shall be dealt with, in accordance with law, with a reasonable dispatch; (o) We have not expressed any opinion on merits and all issues are left open; (p) If possible, proceedings during the time of current Pandemic [Covid-19] be conducted through digital mode; The instant petition sands disposed of in the aforesaid terms. Interlocutory Application(s), if any, also stands disposed of. Learned counsel for the respondents undertakes to communicate the order to the appropriate authority through electronic mode” No Appeal Preferred by the Petitioner(s)

#65. It is an admitted position that the petitioners did not approach the appellate authority for advance ruling. It was the Department through the Joint Commissioner, State Tax who preferred an appeal giving rise to case No. AAAR/01/2021-22. The Department was aggrieved by the order dated 29.09.2020 passed by the Advance Ruling Authority to the extent that the amount received for settlement of sand ghat (bandobasti) by Mines and Geology Department during settlement of sand ghats shall be Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 chargeable to tax at the rate of 5% between the period 01.07.2017 to 31.12.2018. Stand of M/s BSCPL-Petitioner before the Appellate Authority

#66. M/s BSCPL being respondent before the appellate authority appeared and contested the said appeal by filing a counter affidavit. In paragraph ‘9’ of their counter affidavit, the respondents made the following submissions:- “That since the classification of the services being received by the Respondent is now settled the dispute in the instant appeal remains only regarding the rate of tax for the disputed period i.e. from 01.07.2017 to 31.12.2018 and also from 01.01.2019 onwards.”

#67. Having said so, the respondent went on to make further submissions in the counter affidavit. They contended that pursuant to the Sand Policy, Notification No. 2887 dated

22.7.2014, tender document and Letter No. 506 dated 21.10.2014 the State Government had settled the sand ghats for a period of 5 years. The settlement amount for the said period of five years was payable in five equal yearly installments. In these documents it was stated that the yearly settlement amount for the year 2015 shall be the auction amount. In the subsequent years the settlement amount shall be 120% of that of previous year. The schedule for payment of the yearly installment amount was also provided for in all the documents. The first installment of 50% of the yearly Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 installment amount was to be paid by 15th December of the previous year, 25% was to be paid before 15th April and rest 25% was to be paid before 15th September. The said settlement period was extended till 31.10.2020 vide Resolution contained in Memo No. 4948 dated 27.12.2019 with an increase of 50% of the settlement amount. Thereafter, it was further extended till

31.12.2020 vide Resolution No. 2646 dated 14.09.2020 and then it was extended till 31.03.2021 vide Resolution No. 3435 dated

30.12.2020. The extension was lastly granted vide Notification No. 986/M Patna dated 31.03.2021 from 01.04.2021 to 30.09.2021. It is in this background, at this stage, in this writ application, it is being contended that the petitioner cannot be subjected to GST because the taxable event has taken place prior to coming into force of the GST regime. Admittedly, this issue was not raised before the Advance Ruling Authority in the application filed under Section 19 of the SGST/BGST Act, 2017.

#68. This Court further finds that another issue which was in the counter affidavit by way of submission is with regard to the exemption under serial no. 64 of the Notification No. 12 of 2017 dated 28.06.2017. The said notification has been issued by the Government of India in the Ministry of Finance (Department of Revenue), in exercise of power conferred by subsection (3) and Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 subsection (4) of Section 9, subsection (1) of Section 11, subsection (5) of Section 15 and Section 148 of the CGST Act,

#2017. The preamble of the notification states as follows:- “...the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the intra-State supply of services of description as specified in column (3) of the Table below from so much of the central tax leviable thereon under sub-section (1) of section 9 of the said Act, as is in excess of the said tax calculated at the rate as specified in the corresponding entry in column (4) of the said Table, unless specified otherwise, subject to the relevant conditions as specified in the corresponding entry in column (5) of the said Table….” Serial No. 64 of the Notification No. 12 of 2017 reads as under:- “Services provided by the Central Government, State Government, Union territory or local authority by way of assignment of right to use any natural resource where such right to use was assigned by the Central Government, State Government, Union territory or local authority before the 1st April, 2016: Provided that the exemption shall apply only to tax payable on one time charge payable, in full upfront or in installments, for assignment of right to use such natural resource” Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#69. The respondent before the appellate authority submitted that under the GST regime, the respondent would be covered by the exemption granted under serial no. 64 of the Notification No. 12/2017 and is not liable to pay any GST on ‘RCM’ basis on the royalty paid to the government. It is apparent on the record that this was not the subject matter of the discussion falling within the scope of Section ‘97’ of the CGST/BGST, Act, 2017 before the Advance Ruling Authority in the original application.

#70. We have already taken note of the fact that the petitioners had moved this Court in the writ application and several reliefs were prayed for therein. One of the reliefs prayed in the writ application was to quash the order dated 17.09.2020 passed by respondent nos. 1 and 2 under Section 98 of the CGST Act, 2017 and BGST Act, 2017 by which the mining activity of the petitioner was classified in the nature of licensing services for the right to use minerals including its exploration and evaluation taxable at the rate of 9% CGST and 9% BGST with effect from

01.01.2019 under the residual entries of serial no. 17 of the Notification No.11/2017, Central Tax dated 28.06.2017 as amended by Notification No. 27/2018 dated 31.12.2018. It is evident that the petitioner did not challenge the entire order dated Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

17.09.2020 of the Advance Ruling Authority. Further, the petitioner sought for a declaration that licensing services for the right to use minerals including its exploration and evaluation fall specifically under heading 9973 (licensing or rental services with or without operator) as notified in item 17 of Notification No.11/2017 Central Tax (Rate) dated 28.06.2017 particularly clause (iii) thereof read with the subsequent Notification No.31/2017 Central Tax (Rate) dated 13.10.2017 Notification No.1/2018 Central Tax (Rate) Central Tax (Rate) dated 25.01.2018 and Notification No.27/2018 Central Tax (Rate) dated 31.12.2018. Shift of Stand of the Petitioner

#71. It is evident that while the petitioner did not challenge the entire order of the Advance Ruling Authority in the writ petition, even as they did not prefer any appeal before the appellate authority for the advance ruling against the said order, when it came to file a counter affidavit in the appeal preferred by the Department, they raised two issues beyond the scope of Appeal which we have taken note of hereinabove. The tentative kind of approach of the respondent M/s ‘BSCPL’ may be seen from the kind of prayer made in paragraph ‘35’ of their counter affidavit before the appellate authority. There, they prayed for setting aside the order of the Advance Ruling Authority as it is bad in law. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Contrary to the said prayer in the counter affidavit filed before the appellate authority, in this Court a submission has been made in alternative that in case this Court is not persuaded with the proposition enumerated in paragraph ‘A’ to ‘D’, then the impugned decision of the appellate authority of advance ruling be held bad in law and the decision rendered by the original Advance Ruling Authority holding that the rate of GST on services falling under SAC 997337 attracts GST at 5% up to 31.12.2018 and 18% from

01.01.2019 should be upheld. This is a shift of stand by way of alternative submission on behalf of the petitioner in the present writ application.

#72. It is evident from a bare reading of Section 97 of the CGST/BGST Act that the scope for seeking advance ruling is limited to the certain questions. Sub-Section (2) of Section 97 lays down the questions in respect of which the advance ruling may be sought. M/s BSPCL/respondent chose to obtain advance ruling with regard to the question no. (a) of Sub-Section (2). They wanted an advance ruling on the classification of the service. Within the scope of the said question, the Advance Ruling Authority opined that the activity undertaken by the applicant would be covered under the sub-heading 9973 37 that specifies that “licensing services for the right to use minerals including its exploration and Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 evaluation”. M/s BSCPL/respondent neither preferred any appeal even while opposing the appeal preferred by the Department, despite there being an opportunity granted by the Hon’ble Division Bench of this Court in CWJC No. 3286 of 2021.

#73. It is a matter of record that in the writ filed before this Court, the respondent-M/s BSCPL was rather looking for a declaration that licensing services for the right to use minerals including its exploration and evaluation fall specifically under heading 9973 (leasing or rental services, with or without operator) as notified in Item No. 17 of Notification No. 11/2017 Central Tax (Rate) dated 28.06.2017 particularly clause (iii) thereof read with the subsequent Notification No. 31/2017 Central Tax (Rate) dated

13.10.2017, Notification No. 1/2018 Central Tax (Rate) Central Tax (Rate) dated 25.01.2018 and Notification No. 27/2018 Central Tax (Rate) dated 31.12.2018. Thus, in no way, the submissions which are being advanced by learned Senior Counsel for the petitioner under ‘A’ to ‘D’ of paragraph ‘37’ hereinabove were ever raised at any stage of the proceeding. We are, therefore, of the considered opinion that the law being very clear on the subject, the present petitioners well understood the law and never raised any issue of taxability under head 9973. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Royalty is not a Statutory Impost/Tax -- MADA Judgment

#74. We further find that when the present writ application was filed, the petitioner prayed for various reliefs. They went on to seek declaration that royalty being in the nature of statutory impost is a tax and, therefore, the same cannot be exigible to further taxation (paragraph no. 1 (iv)). The petitioner further sought a declaration that the grant of mineral concession is merely a statutory function/ duty under provisions of law, it does not amount to rendition of any service, therefore, the same does not attract the levy of GST. We have taken note of the arguments formulated by learned Senior Counsel under paragraph ‘15’ of our judgment. We are of the opinion that most of the arguments which have been convassed by learned Senior Counsel for the petitioners were already discussed and have been answered by the Hon’ble Supreme Court in MADA judgement. While dealing with the issues as to whether royalty is in the nature of a tax?, in paragraph ‘130’, their lordship held as under:- “130. On first principles, royalty is a consideration paid by a mining lessee to the lessor for enjoyment of mineral rights and to compensate for the loss of value of minerals suffered by the owner of the minerals. The marginal note to Section 9 states that royalties are “in respect of mining leases.” The liability to pay royalty arises out of the contractual conditions of the mining lease.170

#170. [See Mineral Concession Rules, 1960, Rules 27 and 45] Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 A failure of the lessee to pay royalty is considered to be a breach of the terms of the contract, allowing the lessor to determine the lease and initiate proceedings for recovery against the lessee.”

#75. In paragraph ‘133’ of the judgment, their lordships have held as under:- “133. There are major conceptual differences between royalty and a tax: (i) the proprietor charges royalty as a consideration for parting with the right to win minerals, while a tax is an imposition of a sovereign; (ii) royalty is paid in consideration of doing a particular action, that is, extracting minerals from the soil, while tax is generally levied with respect to a taxable event determined by law;171 and (iii) royalty generally flows from the lease deed as compared to tax which is imposed by authority of law.”

#76. In the same judgment, the Hon’ble Supreme Court has held that Under the MMDR Act, the Central Government fixes the rates of royalty, but it is still paid to the proprietor by virtue of a mining lease. In case the minerals vest in the government, the mining lease is signed between the State Government (as lessor) and the lessee in pursuance of Article 299 of the Constitution.

#171. [Goodyear (India) Ltd. v. State of Haryana, (1990) 2 SCC 71, para 27] Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 Through the mining lease, the government parts with its exclusive privilege over mineral rights. A consideration paid under a contract to the State Government for acquiring exclusive privileges cannot be termed as an impost. Since royalty is a consideration paid by the lessee to the lessor under a mining lease, it cannot be termed as an “impost”.

#77. The Hon’ble Supreme Court in MADA judgment specifically held in paragraph ‘129’ and ‘130’ that the principles applicable to royalty apply to dead rent because: (i) dead rent is imposed in the exercise of the proprietary right (and not a sovereign right) by the lessor to ensure that the lessee works the mine, and does not keep it idle, and in a situation where the lessee keeps the mine idle, it ensures a constant flow of income to the proprietor; (ii) the liability to pay dead rent flows from the terms of the mining lease; (iii) dead rent is an alternate to royalty; if the rates of royalty are higher than dead rent, the lessee is required to pay the former and not the latter; and (iv) the Central Government prescribes the dead rent not in the exercise of its sovereign right, but as a regulatory measure to ensure uniformity of rates. It has been clearly held that both royalty and dead rent do not fulfil the characteristic of tax or impost. Patna High Court CWJC No.3531 of 2022 dt.18-04-2025

#78. As regards the transfer of mineral rights to the lessee, the Hon’ble Supreme Court has held in paragraphs ‘340’, ‘341’, ‘342’, ‘343’ and ‘344’ as under:- “340. A mining lease contemplated under the MMDR Act relates to the mining rights and mineral rights. It does not grant surface rights to the mining lessee. However, surface rights are essential to begin any mining operations. In fact, obtaining of the surface rights by a mining lessee over the area where mining operations will be conducted is a prerequisite condition for grant of both a prospecting licence as well as a mining lease. The lessee requires access to the surface rights to effectively exercise their mining rights and privileges enumerated under Part II of Form K. Moreover, as held in Burrakur Coal346, the mining lessee requires enjoyment of surface rights to effectively carry out the mining operations. There cannot be any severance between the two during the continuance of the mining operations. 341. The more important question is when do the mineral rights transfer to the lessee? Since Independence, State legislatures have enacted a spate of land reform laws vesting the right to mines and minerals in the State Government.348 Through the instrument of a mining lease, the State Government transfers its rights in the sub- soil minerals to the lessee for the period of the lease. The nature of the leasehold rights accruing to the lessee can be determined on the basis of the Transfer of Property Act.

#346. [Burrakur Coal Co. Ltd. v. Union of India, 1961 SCC OnLine SC 23 : AIR 1961 SC 954] 348.[Gujarat Land Revenue Code, 1879, Section 69-A; Madhya Pradesh Land Revenue Code, 1959, Section 247; Chhatisgarh Land Revenue Code, 1959, Section 247; Goa, Daman and Diu Land Revenue Code, 1968, Section 36.] Patna High Court CWJC No.3531 of 2022 dt.18-04-2025 A right to carry on mining operations in land to extract a specified mineral and to remove and appropriate that mineral is a “right to enjoy immoveable property” within the meaning of Section 105 of the Transfer of Property Act.118 In case of a mining lease, the property can be enjoyed by working the mine as indicated in Section 108 of the Transfer of Property Act. 342. Section 110 of the Transfer of Property Act deals with the exclusion of the day on which the term of the ease commences. It provides that where the time limited by a lease of immoveable property is expressed as commencing from a particular day, in computing that time such day shall be excluded. It further provides that in situations where the lease does not mention the day of commencement, the time limited by the lease commences from the day of the making of the lease. The model mining lease under Form K specifies the day from which the mineral rights are granted and demised unto the lessee. Thus, the transfer of right to enjoy the property under a mining lease commences from the specified day of commencement. Resultantly, the rights and interests in the minerals specified in the mining lease are transferred from the State Government to the lessee on the specified day of the commencement of the lease deed. 343. Once the interest in the minerals is transferred under a mining lease, the lessee acquires the right to work the mine and win the minerals. It is through this process of working the mine and winning of minerals that minerals are extracted or obtained from the earth irrespective of whether such activity is carried out on the surface or in the bowels of the earth.349 Although the title to minerals vests in the State Government, the mining lease transfers the interest in the mineral from the State Government to the mining lessee.