RCM APPLICABLE ON GOVT ROYAL SEIGNIORAGE

[RV PERUMAL]

SIR,

ONE OF THE ASSESSEE ( HIGH WAYS CONTRACTOR) ENTERED INTO AN AGREEMENT WITH GEOLOGY AND MINING DEPARTMENT FOR ROAD LAYING STONES. FOR THIS, THE ASSESSEE HAS NOT PAID REVERSE CHARGE MECHANISM UNDER SERVICE TAX. NOW THE DEPARTMENT DGGI HAS ISSUED AN SCN AND ASKED TO PAY THE SERVICE TAX FROM 2016-17 & 2017-18.

KINDLY ADVICE, WHETHER HE HAS TO PAY THE TAX OR ANY OTHER RELIEF

AI Summary

Royalty payments to government: potential service tax reverse charge exposure, consider challenge or pay under protest to limit penalty.
Whether service tax under the reverse charge mechanism applies to royalty paid to a State Geology/Mining Department for procurement of crushed stones is contested. The department issued a show cause notice seeking service tax for certain years. Core legal questions are whether such royalty constitutes consideration, whether it is a tax, and whether the scope of taxable "any services" covers payments to government mining departments. Advised options include contesting the notification, exhausting departmental remedies, approaching the High Court, or paying under protest to limit penalty exposure.