Kartik Seth's Live Law Article Debunks Myths Around GST on Mining Royalty

Clearing the Confusion: Does the MADA Judgment Really Settle GST on Mining Royalty?

In an article published on Live Law, Kartik Seth, writing in his capacity as the Supreme Court’s Nodal Counsel for GST Petitioners in the matter concerning GST on Royalty on Mining, addressed a widespread misconception sweeping India’s mining and commercial sectors. Following the Supreme Court’s 9-judge bench ruling in Mineral Area Development Authority (MADA) v. Steel Authority of India Limited, which held that royalty on mining is not in the nature of a tax, many GST-compliant miners began withdrawing their pending appeals, petitions, writs, and SLPs — under the mistaken belief that the judgment had settled the question of GST applicability on mining royalty.

Kartik Seth’s Role: Nodal Counsel and Author

As Nodal Counsel appointed by the Supreme Court for completion of pleadings in the GST on Mining Royalty matters, Kartik Seth was uniquely positioned to clarify the legal position. He explained that the Supreme Court, in the MADA judgment, never adjudicated on the levy of GST on mining royalty — that issue was simply not before the 9-judge bench. Instead, the Court had only examined whether royalty constitutes a tax, holding that royalty paid for mining operations represents a right to enjoy immovable property, not a taxable transaction under Article 246A’s requirement of a “supply of goods or services.”

Why the MADA Judgment and GST Amnesty Scheme Are Being Wrongly Linked

Kartik Seth identified the root of the confusion: the Central Board of Indirect Taxes and Customs’ GST Amnesty Scheme 2025, which offers waiver of interest and penalty in exchange for withdrawal of pending litigation, was being perceived by many as a “panacea” to pre-emptively resolve uncertainty created by the MADA judgment. He clarified that this connection is misguided, since the core issue — whether GST/Service Tax must be paid on mining lease royalty — remains actively pending before the Supreme Court in cases such as Udaipur Chambers of Commerce and Industry v. Union of India, where the Court has already stayed such payments until final adjudication.

A Word of Caution to GST-Compliant Miners

Through the article, Kartik Seth cautioned GST-compliant miners and mining companies with favourable interim orders or stays against making hasty withdrawals of their pending litigation. He pointed to multiple live cases — before the Supreme Court and High Courts including Karnataka and Lucknow — where interim protection remains fully in force, reinforcing that the MADA judgment has had no bearing on the pendency or outcome of these separate proceedings.

Setting the Record Straight

Kartik Seth’s article serves as a clear, authoritative clarification for India’s mining and commercial sectors: the MADA judgment settled only the tax-versus-royalty question, not the GST applicability question, and GST-compliant entities need not rush to withdraw litigation based on a misreading of the judgment. His position as Nodal Counsel in the very matter under discussion lends the piece direct, first-hand authority on a issue that continues to generate anxiety and misinformation across the industry.