2023 (3) TMI 17 - AT - Service Tax

Exemption from service tax - right to use mining of minerals, oil or gas in respect of sand ghats of Patna, Bhojpur and Saran of the State of Bihar - applicability of Mega exemption Notification Sl.No.61 dated 13th April, 2016 - HELD THAT - On examination of the said Notification, right to use assigned by the Government or the local authority before the 1st April, 2016, is entitled for exemption from payment of service tax - Admittedly in the instant case, the right to use of natural resources (Sand) were assigned on 29.12.2014, which has no concern with the terms of payment. There are no infirmity in the impugned order - appeal of Revenue dismissed.

Summary

Issues:
1. Interpretation of Mega exemption Notification Sl.No.61 dated 13th April, 2016 regarding service tax exemption on the assignment of the right to use natural resources.
2. Determination of the liability for service tax payment based on the assignment date of the right to use natural resources.

Analysis:
1. The case involved a dispute regarding the applicability of Mega exemption Notification Sl.No.61 dated 13th April, 2016 to the assignment of the right to use natural resources. The Revenue contended that since the right to use natural resources was assigned after 01.04.2016, the benefit of the exemption should be denied. However, the Adjudicating Authority held that as the assignment was done on 29.12.2014, well before the specified date, the exemption was applicable. The Tribunal agreed with this interpretation, emphasizing that the assignment date, not the payment terms, was crucial for determining eligibility for the exemption.

2. The Revenue argued that as per Rule 7 of Taxation Rules, 2011, the liability for the settlement amount payable from 01.01.2017 to 30.06.2017 arose on 06.01.2017, making the respondent ineligible for the exemption. On the contrary, the respondent's counsel supported the findings of the impugned order, maintaining that the assignment date was the decisive factor. The Tribunal carefully examined the facts, noting that the assignment of the right to use natural resources occurred on 29.12.2014, which predated the relevant taxation period. Consequently, the Tribunal upheld the impugned order, dismissing the Revenue's appeal and the Stay Petition, while disposing of the Cross Objection filed by the respondent.

In conclusion, the Tribunal's decision in this case clarified the importance of the assignment date in determining the eligibility for service tax exemption on the assignment of the right to use natural resources, as per the provisions of Mega exemption Notification Sl.No.61 dated 13th April, 2016. The judgment highlighted that adherence to the assignment date specified in the relevant notification was crucial for availing the exemption, irrespective of the payment terms or subsequent liabilities arising from the assignment.