Principal Commissioner Vs S R Traders (CESTAT Delhi)
The Department filed an appeal against the order dated August 30, 2018 passed by the Commissioner, CGST & Central Excise, Bhopal, which dropped proceedings initiated through a show cause notice dated March 01, 2017 for the period April 2016 to January 2017. The dispute concerned non-payment of service tax on periodical charges paid to the Government or a local authority for assignment of the right to use natural resources, including quarry sand from allotted mines.
Read SC Judgment in this case: SC Declines Interference in Service Tax Relief for Pre-2016 Mining Rights
The Commissioner had dropped the demand on the ground that the agreements were entered into before April 01, 2016 and the amount of thekadhan, including royalty and rent, was predetermined, with the quantum, pattern and due dates of installment payments specified in the agreements.
The Tribunal noted that Section 66D of the Finance Act, 1994, prior to April 01, 2016, covered services provided by Government and local authorities within the negative list, subject to specified exceptions. From April 01, 2016, the expression “support service” in Section 66D(a)(iv) was substituted by “any service”, making services provided to business entities taxable.
The Department contended that although the agreements had been executed before April 01, 2016, the payments under those agreements were due after that date and therefore service tax was payable. Reliance was placed on Rule 7 of the Point of Taxation Rules, 2011 and the CBEC Circular dated April 13, 2016.
