Interim stay on service tax royalty disputes continued while Revenue retained liberty to complete assessment and enquiry.

Interim protection against coercive proceedings for alleged non-payment of service tax on royalty was continued, with no reason recorded to withdraw the existing stay at that stage. In relation to service tax on royalty payable or deposited under Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957, interim protection was also extended. The Court preserved the Revenue's liberty to complete assessment and enquiry and to seek appropriate relief thereafter, so the stay operated only pending further progress in the connected proceedings.

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Issues: (i) Whether the interim stay on proceedings initiated under the Finance Act, 1994 for alleged non-payment of service tax on royalty should continue; (ii) whether there should be a stay on levy of service tax on royalty payable or deposited under Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957.

Issue (i): Whether the interim stay on proceedings initiated under the Finance Act, 1994 for alleged non-payment of service tax on royalty should continue.

Analysis: The existing interim protection was noted, and no reason was recorded to lift it at this stage. The matter was kept open pending further progress in the connected proceedings.

Conclusion: The stay on proceedings was continued.

Issue (ii): Whether there should be a stay on levy of service tax on royalty payable or deposited under Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957.

Analysis: Interim protection was extended in relation to the demand of service tax on royalty, while preserving the Revenue's liberty to complete assessment and enquiry and to seek appropriate relief thereafter.

Conclusion: The stay on service tax on royalty was granted.

Final Conclusion: Interim protection against coercive action was maintained in respect of the service tax dispute concerning royalty, while the Revenue's assessment and enquiry were left unaffected.

Ratio Decidendi: Interim protection may be continued or granted pending adjudication where the Court preserves the parties' rights and leaves the Revenue free to complete assessment and seek revival of the matter after completion.

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