TaxTMI 
TaxTMI 
2026 (8) TMI 1396
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....n providing "cargo handling service" and "supply of taxable goods and service" and is paying service tax thereon. During the course of audit, it was observed that the appellant is receiving the services of the Government on account of using natural resources and is paying royalty thereon to the Government. It was also observed that the appellant had shown an income on account of boulder sales of Rs. 3,28,25,525/- during the period 2015-16 by virtue of an agreement dated 19.12.2014 with M/s. Jindal Saw Ltd. [JSL] for disposal of the boulder from the mining lease area leased to JSL by Government of Rajasthan. It was also revealed that JSL had intimated the Department of Mining and Geology, Bhilwara for consent of Short Term Permit [STP] in favour of the appellant to carry out the disposal of overburden stacked at Tiranga Hill Area on payment of applicable royalty which was to be paid by the appellant. It was also evident that for disposal of overburden by the appellant, JSL has not paid any amount to them. As the appellant had short paid service tax, show cause notice dated 30.11.2018 for the period 2015-16 to 2016-17 and for the further period of April 2017 to June 2017 show cause n....
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....ppellant. He further, pleaded that the appellant was under bonafide belief that sale proceeds received from the customers is not against any service rendered by JSL as no amount was being charged by JSL. According to him, the issue of service tax on royalty payments is an interpretational issue and, therefore, invocation of extended period is not justified. 4. Mr. Sangeet Meena, Ld. Authorised Representative for the Revenue has reiterated the findings of the authorities below and has also pointed out the recent decision of the Apex Court in Mineral Ore Development Authority vs. Steel Authority of India [2024 (21) CENTAX 378 (SC)] holding that royalty paid in respect of mining is a contractual consideration paid by mining lessee to lessor for enjoyment of mineral rights and, therefore, the royalty paid in respect of any mineral removal or consumed from the leased areas is not a tax. On the issue of extended period of limitation, he submitted that the appellant had never disclosed the facts to the Department and they were revealed only pursuant to the audit. He further submitted that the appellant did not assess the correct amount of service tax and have also not shown the actual ....
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.... 1. That, M/s Jindal Saw Ltd. has been allotted Mining lease No. 631/05 for the execution of mining work as per the order of State Government. 2. That, the overburden generated from the mining operation has been collected in the factory of M/s Jindal Saw Ltd located near Tiranga Pahadi 3. That, the company through its consent has authorized Mis Northern Core Drilling Pvt. Ltd., Jaipur for the disposal of the above accumulated overburden. 4. That, M/s Northern Core Drilling Pvt. Ltd., Jaipur has been authorized to comply and fulfill all legal procedures of Mining Department for the disposal of overburden collected in Tiranha Pahadi area. 5. That, M/s Jindal Saw Ltd. hereby gives consent that M/s Northern Core Drilling Pvt. Ltd., Jaipur shall obtain STP (Short Term Permit) from Mining department for the disposal of overburden. 6. That, the royalty for disposal of overburden shall be borne and paid by M/s Northern Core Drilling Pvt. Ltd, Jaipur. Date: 19.12.2014 For M/s Jindal Saw Ltd. Rajendra Gaur For Northern Core Drilling (P) Ltd. Ronak Singh Director" 8. Reading clause 3 of the letter, we find that JS....
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....ppellant is not one of 'sale' and the invoices issued are nothing, but as known under the Income Tax law, an accounting jugglery. The invoices are merely a camouflage to hide the activity of 'service'. The lifting and disposal of overburden by the appellant is a commercial transaction and in the normal routine there cannot be any dealing without any price/consideration. In the commercial world, the say is, nothing is free. We may look it otherwise, under the Mining laws, it was the responsibility of JSL being the mining owner to have the overburden removed and if he had hired the appellant to do so, he would have paid the service charges. There is no justification why the appellant would lift and remove the overburden without charging any amount. It is nothing but an understanding between the two so as to evade the liability of service tax, which is leviable on such transaction. We therefore, do not agree with the contention of Mr. B. L. Narasimhan, that they transported their own boulders after issue of sale invoices by JSL. 10. The period involved in the present dispute falls under the post negative era. Section 65B(44) defines 'service' to mean any activity carried out by a p....
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....e gross amount charged by the service provider for such service provided or to be provided by him;" 12. In support of his arguments, Mr. B. L. Narasimhan has tried to equate the disposal of overburden with the disposal of fly ash, where this Tribunal in the case of Tamil Nadu Generation and Distribution Corporation Limited vs. Commissioner of Service Tax, Chennai [(2023) 6 CENTAX 107 (Tri.-Mad.)/2023 (385) ELT 144 (Tri.-Chennai)] held that consideration received was for sale of fly ash and not for any services and therefore demand of service tax under Business Support Services was not sustainable. However, the concept of disposal of fly ash was under different and peculiar circumstances which cannot be accepted in the present context. As noticed in the said decision, the Government of India, Ministry of Environment and Forest issued Notification dated 14.09.1999 to the effect that fly ash should be supplied free of cost but subsequently by Notification dated 06.11.2008, the Ministry of Environment permitted sale of fly ash to the user agencies. Therefore, the consideration received from the cement and Vito sheet companies for supply of fly ash was for supply/sale of fly ash. The....
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....he facts of the present case and lends support to the conclusion that the appellant has provided services to JSL and was therefore, liable to pay service tax. 14. Regarding the second issue of service tax levied on royalty and permit fee, firstly, we may take note of the decision in Mineral Ore Development vs. Steel Authority of India where the nine Judges Bench of the Apex Court, decided the issue that royalty paid in respect of mining is a contractual consideration paid by mining lessee to lesser for enjoyment of mineral rights. Therefore, royalty paid in respect of any mineral removed or consumed from lease area at specified rates as envisaged under Section 9 of Mines and Minerals, (Development and Regulation) Act, 1957 is not a tax. Hence, there is no quarrel with the levy of service tax on the ground of double taxation. 15. The contention of Mr. B. L. Narasimhan that service tax on services provided by government were brought into force only w.e.f. 01.04.2016 and in their case services, if any, were received prior to 01.04.2016 and hence, they cannot be subjected to service tax. In this context, the provisions of Section 66D(a) as amended w.e.f. are set out below: ....