2020 (2) TMI 1013

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....vites bids for grant of 'collection of rights for toll royalty, etc.' for a lumpsum amount, for the given period. The appellant as the successful bidder is required to pay a fixed bid amount, either in one lumpsum or in instalments as allowed by the principal. The appellant under the terms of grant, collects toll/ royalty. In this activity, the appellant may either collect more amount than the bid amount and thereby have some profit or surplus or they may collect less amount than the bid amount and thus incur loss. The dispute in this appeal relates to demand of service tax from the appellant under the category of 'Business Auxiliary Service' (BAS) as it appeared to Revenue that the surplus amount collected by the appellant, is commission e....

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....had incurred a loss in the activity and in the other financial year they were in surplus. Being aggrieved with the dropping & confirmation of demands both Revenue and appellant preferred appeals before the Commissioner (Appeals). Both the appeals were disposed of by separate order by different Commissioner (Appeals) holding against the appellant-assessee, and confirming the demand alongwith penalty in both the cases. In order-in-appeal dated 30.06.2018, the learned Commissioner (Appeals) has failed to discuss in order, the findings of the Assessing Authority, as regards lack of consideration, which is essential for a contract of service. Learned Commissioner (Appeals) have simply reproduced the definition under Section 68 as regards payment....

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....ut a consideration to have mining operation in the lease area on execution of the mining lease. It is a part of the agreement between the parties to have a lease of mining area to undertake mining operation. Royalty being consideration, certainly places assignment of right to use natural resources deposited in the leased area, as a service as defined under Section 65B(44) of the Finance Act. It was further held that the activity in question is a service. 4. Accordingly, the Commissioner (Appeals) observed that royalty is not tax, but a consideration to have mining right operation in the leased area. Further, taken notice of the definition of service, it was observed that from the contract awarded to the appellant by the Mines Department, i....