Case Law Details
Mahanadi Coalfields Limited (Orient Area) Vs Commissioner of CGST & Central Excise (CESTAT Kolkata)
Whether payment made to the CAMPA Fund under the head Net Present Value (NPV), Compensatory afforestation, etc. to the Forest Department for obtaining various clearances for diversion of forest land for non-forestry purposes (mining) is a ‘Declared Service’ provided by the Government under Section 66E(e) so as to attract Service Tax liability under RCM.
The issue came up for consideration before the Division Bench of the Kolkata Tribunal. The Tribunal after considering the objective of the payments made under the Forest Act and the CAMPA Act, 2016, legislated in pursuance to the Hon’ble Supreme Court’s direction, came to the conclusion that the payments so made by the assessee are by operation of law.
The Tribunal also noted that the implication of diversion of forest land for use in non-forestry purposes result in possible loss of natural resources of the country. While developmental activities are essential for economic growth of the country, at the same time, it is necessary to ensure that such development does not comes at the cost of India’s invaluable natural capital, particularly the forest.
The Tribunal accordingly observed that the payment in the form of NPV / CAMPA are required to be paid to make good the damage caused by such user agency which cannot be said to be ‘consideration’ for service. With the above observations, the Tribunal allowed the assessee’s appeal and set aside the demand of service tax.
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