The Allahabad High Court has granted interim relief to a mining contractor by staying the payment of Goods and Services Tax (GST) on the grant of mining lease/royalty for the financial year 2019–20, while directing the Revenue authorities to file their response in the matter.
The Bench of Justice Saumitra Dayal Singh and Justice Swarupama Chaturvedi extended the interim protection on the same reasoning adopted in an earlier lead case involving the levy of GST on mining royalty.
During the hearing, the counsel appearing for the Revenue sought four weeks’ time to file a counter affidavit. The Court allowed the request and granted the petitioner an additional two weeks thereafter to file its rejoinder.
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Significantly, the Bench ordered that until further orders, payment of GST on the grant of mining lease/royalty for the financial year 2019–20 shall remain stayed. The interim protection was granted because a similar interim order had already been passed in the lead matter involving the same legal issue.
The High Court directed that the writ petition be listed along with M/s A.D. Agro Foods Private Limited v. Union of India, indicating that the controversy involved is common to both cases. The Court also directed that the name of Sri Gopi Krishna Sood be reflected as counsel for the respondent in the connected matter.
The dispute concerns the long-standing controversy over the levy of GST on mining royalty or consideration paid for the grant of mining leases. Various High Courts across the country have been examining whether such royalty payments constitute a taxable supply under the GST regime and the extent of the tax liability.
By extending the benefit of the interim order granted in the lead case, the Allahabad High Court has ensured that no coercive recovery of GST for the relevant financial year will be made against the petitioner until the issue receives further judicial consideration.
The department has been granted four weeks to file its counter affidavit, after which the petitioner may submit a rejoinder within two weeks. The writ petition will thereafter be heard together with the connected lead matter, which is expected to determine the broader legal issue relating to GST on mining lease royalty.
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