CESC Ltd. Vs Commissioner of Central Tax (CESTAT Kolkata)
The CESTAT Kolkata allowed the appeal filed by CESC Ltd. against an order confirming Service Tax demand of Rs. 14,70,63,835/- along with interest and equivalent penalty for April 2016 to June 2017. The demand related to royalty and other periodic payments made to the Government of West Bengal/alleged local authorities under reverse charge in connection with the assignment of mining rights in the Sarisatolli Coal Block.
The appellant had participated in the public auction of mining rights conducted under the Coal Mines (Special Provisions) Act, 2015 and entered into a Coal Mine Development and Production Agreement dated 02-03-2015 with the President of India. The mining lease was deemed effective from 22-04-2015 and was subsequently formalized through a Mining Lease Deed dated 04-11-2015. The appellant made payments including royalty under Section 9 of the Mines and Minerals (Development & Regulation) Act, 1957, additional premium, DMF and NMET contributions, and AMBH fees.
The appellant contended that although Section 66D(a)(iv) of the Finance Act, 1994 was amended with effect from 01-04-2016 to bring all services provided by Government to business entities within the Service Tax net, the mining rights had already been assigned before that date. It relied upon judicial precedents including Principal Commissioner of CGST and Central Excise Vs. SR Traders and Shrawan Kumar Pathak vs Commissioner of Central Excise. It also submitted that the amounts had suffered Central Excise duty as part of the cost of production of coal and therefore could not simultaneously be subjected to Service Tax. Limitation and the taxability of DMF, NMET and AMBH payments were also raised as alternative grounds.
