2026 (10) TMI 637

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....l, Advocate For the Department : Shri Anil Kumar, Authorized Representative ORDER P.V. SUBBA RAO : The undisputed facts of this case are that M/s Northern Coalfields Limited [the appellant] is the subsidiary of Coal India Limited and has its headquarters in Singrauli, M.P. and it mines and sells coal on which it paid central excise duty. It also avails Cenvat credit on the input and input services including the service tax paid on under reverse charge mechanism. 2. The undisputed legal position is that no service tax can be levied on the taxes paid to the State Governments but service tax has to be paid on the fee charged by the State Government in lieu of services. 3. The short point of dispute is whether the appellant wa....

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....ot taxes. Paragraph 20 of this judgment is reproduced below :- "20. The State Government enacted the Madhya Pradesh Gramin Avsanrachna Tatha Sadak Vikas Niyam, 2005, to provide for additional resources for the development of infrastructure and roads in rural areas with special emphasis on backward and mining areas of the State. Under the said Adhiniyam, Section 3 provides for "Levy of Tax", Section 4 deals with "Payment and Recovery of tax" and Section 8 deals with "Utilisation of Tax Proceeds". By enacting this legislation, the State Government has acted within its legislative competence to raise additional financial resources. The levy imposed under the Act is in the nature of a tax intended to create a fund for development of ru....

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..... Therefore, the respondent - Authority has rightly observed that the petitioners being mining holders, would be beneficiaries of this development. Hence, it is a "Service" provided to them for which this tax is being collected. Therefore, such an opinion has not been formed contrary to the judgment passed in the case of M/s Neogy and Sons (Supra)". 7. Respectfully following the judgment of the Madhya Pradesh High Court, we hold that both these payments were in the nature of fees for services and not taxes and, accordingly, service tax has to be paid under reverse charge mechanism on the fees so paid. We find that since the demand of service tax is under reverse charge, which entitles the appellant to pay service tax with one hand and ta....