Prism Johnson Limited Vs Commissioner of CGST & Central Excise (CESTAT Delhi)
Summary: The Customs, Excise & Service Tax Appellate Tribunal, New Delhi, Principal Bench, decided five service tax appeals and four excise appeals arising from the order-in-original dated 30.06.2021, read with corrigendum dated 29.07.2024, concerning the period from 01.10.2014 to 30.06.2017.
The principal dispute concerned limestone mining at Ramasthan Mines. The Government of Madhya Pradesh had granted the mining lease to Shrawan, and the lease prohibited transfer without prior written consent of the State Government. No such consent or transfer was established. Shrawan nevertheless entered into an Operator Agreement, Commercial Agreement and Agency Agreement with M/s Prism Johnson Ltd. (PJL). Under these arrangements, PJL undertook mining operations and engaged M/s AR Transport (ART) for excavation and transportation of limestone.
The Revenue treated PJL as a service provider rendering mining services to Shrawan. According to the Revenue, PJL did not receive cash consideration; instead, Shrawan sold limestone to PJL at prices substantially below market prices, and the price differential represented consideration for the mining services. PJL had neither obtained service tax registration nor paid service tax.
PJL contended that the agreements, read together, transferred the effective rights in the mine and limestone to PJL, making the mine a captive mine and the mining activity self-service. The Tribunal rejected this contention. It held that a mining licence is distinct from ownership of land or ownership of mined products. Since the mining licence remained with Shrawan and had not been transferred to PJL, Shrawan alone was authorised to undertake mining, either himself or through contractors.
