TaxTMI 
TaxTMI 
2026 (6) TMI 1475
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....47.219 hectares (out of 48.117 hectares) of land at Villages Naibaga & Katupalli, Thana Joda, Sub-Division Champua, District Keonjhar (Cadastral Survey No. 73 G/5), was executed between the Governor of Orissa and the Appellant on 17.11.2009 (and duly registered on 04.12.2009) for a term of 20 years commencing from 17.11.2009. 2.3 By reason of the said grant of mining lease, the Appellant is required to pay Royalty under Section 9 of the MMDR Act, and contributions towards DMF (Section 9B), NMET (Section 9C) and User fee, computed with reference to the minerals removed. 2.4 Prior to 01.04.2016, the services provided by the Government or a local authority, barring a few specified exceptions such as support services, were covered under the negative list of services under Section 66D(a) of the Finance Act, 1994, and were accordingly not exigible to Service tax. The grant by the Government of the right to use natural resources, including by way of a mining lease, was thus outside the purview of Service tax, and the consideration paid in respect thereof, comprising Royalty, DMF, NMET and User fee, bore no Service tax liability during that period. 2.5 The assignment of the right ....
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.... and the issue governed by Kesoram Industries; and - by virtue of Rule 7 of the Point of Taxation Rules, 2011, the point of taxation is the date on which the payment becomes due or is made, and the service being provided throughout the period and not merely on the date of execution of the lease, Service tax is payable on the royalty and other charges paid after 01.04.2016. 2.10 Accordingly, the impugned Order confirmed the demand of Rs.2,68,67,703/- under the proviso to Section 73(1), along with interest under Section 75 and penalties of Rs. 26,86,770/- under Section 76(1) and Rs. 10,000/- under Section 77(2) of the Finance Act, 1994. 2.11 Aggrieved with the said order, the appellant preferred WP(C) No. 8527/2020 before the Hon'ble High Court of Orissa, which by order dated 23.12.2020 directed the appellant to file an appeal before this Tribunal along with an interlocutory application seeking waiver of pre-deposit. Hence the present appeal. 3. The ld.Counsel for the appellant, submits that the taxable event in the case of provision of a service is the time when the service is provided or agreed to be provided. He submits that the right to use natural resources hav....
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....endered by the Government to a business entity became chargeable to Service tax [Notification No. 06/2016-ST dated 18.02.2016]. Correspondingly, reverse charge was extended to such services only with effect from 01.04.2016 by Notification No. 18/2016-ST dated 01.03.2016 amending Serial No. 6 of Notification No.30/2012-ST. The impugned service of allocation of natural resources does not fall within "support service" as defined under Section 65B(49) and was therefore not even amenable to reverse charge prior to 01.04.2016. 3.3 He further submits that the grant of natural resources not having been excluded from the negative list prior to 01.04.2016, no Service tax implication can be fastened upon the Appellant in respect of a lease executed on 17.11.2009, even though the consideration (royalty) was paid periodically, spilling over after 01.04.2016. 3.4 Further, he submits that Point of Taxation Rules, 2011 merely provide the machinery for collection of the tax and the point at which it becomes payable; they can neither enlarge the charge nor render taxable a service that was not taxable on the date it was provided or agreed to be provided. A subsequent levy does not affect the t....
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....ated 18.12.2025 - CESTAT New Delhi (x) RJ Minerals v. Commissioner, Final Order No.51911/2025 dated 11.12.2025 Wherein it has been held that the assignment of the right to use natural resources/execution of the mining lease was prior to 01.04.2016, Service tax cannot be fastened even if the consideration is paid thereafter. He, therefore, prays that their appeal be allowed by setting aside the impugned order. 4. The ld. A.R. for the Revenue has supported the impugned order. 5. Heard both the parties and considered the submissions. 6. We find that the issue involved herein for consideration is whether Service tax is leviable, under reverse charge, on the Royalty (and the contributions towards the District Mineral Foundation (DMF) and the National Mineral Exploration Trust (NMET) and User fee) paid by the Appellant to the Government of Odisha during 01.04.2016 to 30.06.2017 for the assignment of the right to use natural resources, where the mining lease in question was executed on 17.11.2009, i.e. long prior to 01.04.2016 - the date on which services rendered by the Government to a business entity first became exigible to Service tax under the Finance Act, 1994, ....
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....994 as: "support services" means infrastructural, operational, administrative, logistic, marketing or any other support of any kind comprising functions that entities carry out in ordinary course of operations themselves but may obtain as services by outsourcing from others for any reason whatsoever and shall include advertisement and promotion, construction or works contract, renting of immovable property, security, testing and analysis;" 3.3. However, with effect from 01 April 2016, all services provided by the government were brought under the service tax net. Therefore, services by way of grant of natural resources by the Government became taxable only with effect from 01 April 2016. In the present case, the agreements were executed prior to 01 April 2016 and therefore the provisions of service tax, as applicable prior to the said date would be applicable to determine the leviability of service tax on the royalty payments. It has been settled by a number of judgements of the Tribunals that when the assignment of right to use natural resources was made before 01 April 2016, service tax liability cannot be fastened upon the Appellant even if the consideration for the sam....