Northern Core Drilling Pvt Ltd Vs Commissioner (CESTAT Delhi)
Summary: M/s. Northern Core Drilling Pvt. Ltd. filed two appeals before the CESTAT, New Delhi challenging orders confirming service tax demands concerning disposal of overburden, royalty and permit fees paid to the Government of Rajasthan. The appeals related to the periods 2015–16 to 2016–17 and April 2017 to June 2017.
The appellant was engaged in “cargo handling service” and “supply of taxable goods and service”. During audit, the Department noticed royalty payments to the Government in connection with removal of overburden and income of Rs. 3,28,25,525/- shown as boulder sales during 2015–16. The arrangement arose from an agreement dated 19.12.2014 with M/s. Jindal Saw Ltd. (JSL), the mining lease holder. JSL had authorised the appellant to dispose of accumulated overburden and obtain a Short Term Permit from the Mining Department, with the royalty to be borne by the appellant.
The principal dispute was whether the appellant had purchased overburden from JSL and subsequently sold it to customers, as claimed by the appellant, or whether the appellant had rendered a service to JSL by removing and disposing of overburden. The Tribunal examined the transaction in the context of the definition of “service” under Section 65B(44) and declared services under Section 66E(e) of the Finance Act, 1994.
