Mining Engineer Vs Commissioner of CGST (CESTAT Delhi)
The appeal was filed by the appellant, a Mining Engineer from the Department of Mines & Geology, Rajasthan, against Order-in-Original dated 30.07.2019, by which a service tax demand of ₹3,47,87,620/- along with interest and penalty was confirmed. The demand arose from a show cause notice dated 23.10.2018 issued by the department.
The appellant is engaged in granting mining leases for extraction and sale of minerals in Bharatpur district, Rajasthan, and is also responsible for collection of statutory levies such as royalty, dead rent, and excess royalty. The department alleged that the royalty collected by the appellant was in the nature of rent for allowing use of vacant land for mining purposes and, therefore, liable to service tax under the category of “Renting of Immovable Property.” Accepting this view, the Commissioner held that royalty and dead rent were akin to rental payments for use of land and confirmed the demand with interest and penalties, leading to the present appeal.
The appellant contended that royalty and dead rent collected for grant of mining rights are exempt under section 66D(a) of the Finance Act, 1994. It was submitted that the issue was no longer res integra, as it had already been decided in favour of the appellant in its own earlier case by the Tribunal vide Final Order dated 25.11.2021. The appellant argued that grant of mining rights is a sovereign function exercised under statutory provisions and does not constitute a taxable service.
