2018 (10) TMI 99 - HC - Service Tax

Levy of Service Tax - amount of royalty paid by the petitioner to the State of Jharkhand towards use of mineral resources - reverse charge mechanism - Held that - Neither any show cause notice nor any adjudication upon the payment of service tax amount has been done by the respondents. As and when show cause notice is issued by the respondent upon this petitioner, a reply shall be given and such show cause notice shall be adjudicated upon by the respondents in accordance with law and on the basis of evidence on record. This petitioner appears to be a chance taking petitioner. In advance it is avoiding the liability which is not permissible in the eye of law. Petition dismissed.

Summary

Issues:
Challenge to the levy of service tax on royalty paid for mineral resources under Section 66B of the Finance Act, 1994.

Analysis:
The petitioner sought relief through a writ petition, challenging the imposition of service tax on the royalty paid for mineral resources. The specific prayers included a declaration that no service tax is leviable on the royalty amount, a writ restraining the respondents from demanding service tax on the royalty, and a declaration that royalty should be considered as tax and not as consideration for services provided by the State Government. The court observed that the petition appeared premature as no show cause notice or adjudication had been done by the respondents regarding the service tax payment. The court emphasized that the respondents had the authority to inquire into the matter and that the petitioner was not immune from such an inquiry. Since no final decision had been made by the respondents, the court declined to decide on the petitioner's prayers, stating that it was premature to do so. The court highlighted that the petitioner seemed to be attempting to avoid liability prematurely, which was not permissible under the law. The court made it clear that it was not pre-adjudicating the issue before the respondents finalized their decision. Consequently, the writ petition was dismissed by the court.

This analysis of the judgment from the Jharkhand High Court underscores the court's position on the premature nature of the writ petition challenging the levy of service tax on royalty paid for mineral resources. The court emphasized the need for the respondents to complete the inquiry process and make a final decision before any legal determination could be made. The dismissal of the writ petition was based on the court's view that the petitioner was attempting to avoid liability prematurely, and that it was not appropriate to pre-judge the issue before the respondents had completed their assessment.