Service tax on mining rights payments turns on the service date, not later payment, under the pre-2016 negative list regime.

Service tax liability on royalty and other levies depends on when the service was provided or agreed to be provided, not when payment was later made. Services relating to assignment of the right to use natural resources arose under an agreement executed before 01.04.2016, when services by Government to business entities fell within the negative list under Section 66D of the Finance Act. The later amendment excluding such services from the negative list operated only prospectively from 01.04.2016 and did not shift the point of taxation. Accordingly, payment made after 01.04.2016 did not make the pre-existing service taxable.

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Issues: Whether service tax was payable on royalty and other levies paid after 01.04.2016 for services in relation to grant of mining rights received before 01.04.2016.

Analysis: The liability to service tax depends on the time when the service is provided or agreed to be provided. The relevant service in relation to assignment of the right to use natural resources arose under an agreement executed prior to 01.04.2016. Before that date, services by Government to business entities were broadly covered by the negative list under Section 66D of the Finance Act, and the later amendment excluding such services from the negative list operated only prospectively from 01.04.2016. Payment made after that date did not alter the point of taxation, because the taxable event had already occurred when the service was rendered.

Conclusion: Service tax was not payable, as the services were received before 01.04.2016 and were within the negative list then applicable.

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