J.K. Engicon Private Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
J.K. Engicon Private Limited and JK & BSECPL (JV) filed appeals before the CESTAT Kolkata against orders confirming service tax demands under the Reverse Charge Mechanism (RCM) on amounts described as “Royalty on Mineral” in their accounts. As both appeals involved an identical issue, they were heard and decided together.
The first appellant, JK & BSECPL (JV), was engaged in providing works contract services relating to roads and bridges, which were fully exempt from service tax. It acted as a sub-contractor for a road and bridge construction contractor and had not obtained service tax registration because neither the main contractor nor the sub-contractor was liable to service tax on those works. During scrutiny of its balance sheet for 2016-17, the department noticed an expenditure entry of ₹1,04,00,677 under “Royalty on Mineral” and issued a show cause notice dated 22.10.2021, alleging liability to pay ₹15,60,102 as service tax under RCM by invoking the extended limitation period.
The second appellant, J.K. Engicon Private Limited, was engaged in works contract services for organisations including the North Eastern Railway and Public Works Department. During verification of records for FY 2016-17 and part of FY 2017-18, the department found royalty payments of ₹24,40,966 and issued a show cause notice dated 22.10.2021, demanding ₹3,66,145 under RCM by invoking the extended period.
