2024 (5) TMI 621 - AT - Service Tax

Levy of service tax on mining royalty - mining royalty paid by the appellant for mining to Government of Odisha in the month of April 2016 for the quantity of Ore extracted in the month of March 2016 - N/N. 22/2016-ST dated 13.04.2016 read with CBEC Circular No.192/02/2016 dated 13.06.2016 - HELD THAT - The said issue has been examined by this Tribunal in the case of S.R. Traders 2023 (5) TMI 766 - CESTAT NEW DELHI , wherein this Tribunal has observed ' the appellant received services in relation to assignment of right to use natural resources from the State Government by virtue of the agreement dated 2-1-2016 and, therefore, the provisions of service tax, as were in force prior to 1-4-2016, would be applicable. Grant of natural resources was not excluded from the scope of negative list prior to 1-4-2016 and so no tax implication can be fastened on the appellant for such period.' - The said order has been affirmed by the Hon ble Apex Court. The appellant are not liable to pay service tax on the royalty paid for mining of Bauxite Ore in the month of March 2016, although the payment of royalty was made in the month of April 2016 - there are no merits in the impugned order and the same is set aside - appeal allowed.

Summary

Issues involved:
1. Whether the mining royalty paid by the appellant for mining to Government of Odisha in April 2016 for the Ore extracted in March 2016 is liable to pay service tax u/s 78(1) of the Finance Act, 1994?

Summary:

Issue 1: Liability of service tax on mining royalty paid in April 2016 for Ore extracted in March 2016

The appellant had an agreement with the Government of Odisha for extracting Bauxite Ore and paid mining royalty and other charges monthly. The service tax on mining royalty came into effect from April 2016. The Directorate General of Goods & Service Tax Intelligence initiated proceedings against the appellant for non-payment of service tax from April to September 2016. The appellant contested that as the service tax was levied from April 2016, no demand should be raised for the mining royalty paid in March 2016, even though paid in April 2016. The appellant argued that prior to April 2016, services provided by the Government were not subject to service tax, except for certain exceptions. The appellant contended that the grant of natural resources was not excluded from the negative list before April 2016, hence no service tax liability should be imposed. Referring to a previous Tribunal decision, the appellant argued that no tax implication can be imposed for the period before April 2016. The Tribunal held in favor of the appellant, citing the previous decision, and concluded that the appellant was not liable to pay service tax on the mining royalty paid for Bauxite Ore in March 2016, even though the payment was made in April 2016. The impugned order was set aside, and the appeal was allowed with consequential relief.