TaxTMI 
TaxTMI 
2024 (12) TMI 84
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....t under reverse charge mechanism. However, over and above the said royalty amount as was required to be paid for mining of any natural resource, the appellant has paid sums @ 30% and 2% of the Royality amount to the state government on account of "District Mineral Foundation (DMF)' & " National Mineral Exploration Trust (NMET) as provided under section 9B & 9C respectively of the said Act. Department observed that appellants have failed to discharge their service tax liability on the said two amounts for which appellants were liable under Reverse Charge Mechanism. It was observed that an amount of Rupees 19,94,78,400/- towards 30% of the royalty and an amount of Rupees 1,32,98,560/- towards 2% of the Royalty as was paid by the appellant on account of DMF & NMET respectively, during the period from 01.04.2016 to 30.06.2017. But service tax accounting, to Rupees 3,19,16,544/- was not paid under RCM. 2. Based on these observations the show cause notice bearing number148/2018-19 dated 11.03.2019 was served on the appellant proposing the discovery of the aforesaid amount of Rs. 3,19,16,544/- along with proportionate interest and the appropriate penalties. The said proposal has been con....
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....aside and the appeal is prayed to be allowed. 7. While rebutting these submissions Ld. Authorized representative ( AR) for the department submitted that the amounts paid to the District Mineral Foundation (DMF) and to the National Mineral Exploration Trust (NMET) are akin to 'Royalty' and hence service tax is payable on these payments also as is in the case of royalty. Hence, there is no infirmity in the order under challenge when the service tax demand qua the amount paid to DMF & NMET is confirmed along with the interest. Since the non-payment of service tax resulted into evasion of revenue, penalty has also been rightly Imposed. LD. AR has relied upon the decision in the case of Vikram Ispat vs commissioner of Central exercise, Mumbai-III reported in 2000 (120) E.L.T. 800.(Tri. LB) to impress upon that nature of tax cannot be determined by the measure thereof. With these submissions and denying all the grounds raised by the appellant, for challenging the impugned order, the present appeal is prayed to be dismissed. 8. Having heard the rival contentions of both the parties and perusing the entire record of this appeal, we observe and hold as follows: In the present case, the d....
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.... a universal concept based on the premise that the mineral resources are "wasting assets", "one-crop-product" or "once only endowment". 11. The honorable Supreme Court of India in the India Cement case 1989 titled as India Cement Ltd. vs. State of Tamil Nadu reported as 1989 SCR (suppl.) (1) 62 SC ruled that royalty is tax, thereby preventing states from levying additional taxes or cesses on Royalty limiting the ability of state to generate revenue from mining activities. The states are otherwise empowered to Levy taxes on mineral rights in terms of entry 50 of list II, the state list. However, the year 2004 the five judge bench of the Apex court revisited the India Cement judgment while deciding the case titled as State of West Bengal vs. Kesoram Industries Ltd. in Civil Appeal No. 1532 of 1993 decided on 15.01.2004 and stating that the India Cement judgment suffered from a typographical error and the court had mistakenly written that "royalty is a tax" while meaning that "cess on royalty" is a tax. This contradiction of verdict by two constitutional benches was referred to the larger bench of Supreme Court. The nine judge bench has decided the reference in the case titled as Min....
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.... related operations in such manner as maybe prescribed by the state government. (3) the composition and functions of District Mineral Foundation shall be such as may be prescribed by the state government Provided that the central government may give directions regarding composition and utilization of funds by the District Mineral Foundation. (4) to (6) ----------------------- The same is the position in respect of payments made to NMET under section 9C of the Mines Act. 16. The above provisions clarify that DMF and NMET are the trusts created by the state governments being different from the later. In the light of above discussion, the question to be adjudicated for deciding service tax liability of the appellants towards the amount paid to both these trusts is: "Whether DMF & NMET are also rendering any service to the appellants and that they are Governmental Authorities." 17. Foremost it can judicially be noticed that impact of mining can occur at local, regional, and global scales through direct and indirect mining practices. Mining operations often result, insignificant, environmental impacts on local ecosystems and broader implications for planetary environmental healt....