Mining Engineer Vs Commissioner of GST & Central Excise (CESTAT Delhi)
Conclusion: Service of granting of mining rights provided by the Government would not fall under the category of ‘support services’ and after 01.04.2016 the liability was always cast upon the service recipient and the confusion created by the definition of “support service” was removed and the sanctity of negative list which comprises of services rendered for the public by Government and local authority was retained.
Held: Assessee-Department of the State Government of Rajasthan, was issued show cause notices demanding service tax under the category of “Renting of Immovable Property Service” for the period 01.07.2012 to 31.03.2016. After adjudication, by various orders, the original authority confirmed the demand, interest and penalties. Revenue had also filed appeals against the order passed by adjudicating authority who had granted benefit of reduced penalty and also against order of Commissioner (Appeals) who had set aside the demand. Revenue demanded service tax on the royalty and dead rent collected for grant of mining rights by assessee herein, by treating the activity as support service in the nature of Renting of Immovable Property Service on a Forward charge basis. It was held that the clarification issued by the Board under the new Tax regime w.e.f. 01.07.2012 explaining the application of definition of “support services” lays down that services provided by Government in the nature of grant of mining rights or licensing rights did not fall within the meaning of “support services” and was not taxable service. The circular / clarification / instructions issued by the Board were binding on the Revenue. True, it might be that renting of immovable property was mentioned in the include part of the definition of “support services”. However, the said services of renting of immovable property had to be understood in the context of it being a support service provided by a Government to business entities. The service of renting of immovable property would fall within the definition of “support service‟ only if such services fit into the middle part of the definition. The above analysis of the definition would throw more light on the argument advanced by assessee that though liability to pay service tax on renting of immovable property remained always on the service provider before and after 01.04.2016, however, the Revenue had issued SCNs to the lessee/service recipient for the period after 01.04.2016. It can be gathered that the intention to omit the word “support service” and substitute the word “any service” wherein the liability was always cast upon the service recipient was to sort out the confusion created by the definition of “support service” and to retain the sanctity of negative list which comprises of services rendered for the public by Government and local authority. Assessee being the Department of State of Rajasthan, the allegation that they had willfully and deliberately suppressed facts was without any basis. The details of lease deed, royalty and dead rent collected etc. were reflected in the accounts. No particular positive act of willful and deliberate suppression had been unearthed by Revenue with cogent evidence. Further, in the present case, there was clarification issued by the Board that grant of mining rights was not support service. For these reasons, it was held that demand raised invoking the extended period could not be sustained.
FULL TEXT OF THE CESTAT DELHI ORDER
The Mining Engineer, Department of Mines and Geology, Government of Rajasthan, the assessee herein, was issued show cause notices demanding service tax under the category of “Renting of Immovable Property Service” for the period 01.07.2012 to 31.03.2016.
After adjudication, by various orders, the original authority confirmed the demand, interest and penalties. Aggrieved by the decision of confirmation of demand, interest and penalty, the assessee has filed appeals. Revenue has also filed appeals against the order passed by adjudicating authority who has granted benefit of reduced penalty vide OIOs dated 19.02.2019 and also against order of Commissioner (Appeals) who has set aside the demand vide OIA No.498(SM)/ST/JPR/2018 dated 30.11.2018. The parties are hereinafter referred to as Assessee and Revenue for the sake of convenience.
2. Revenue had filed applications for early hearing of the appeals and Miscellaneous Applications were filed by assessee to link up the appeals for being heard together. These applications were allowed on 13.01.2021 and 21.01.2021. The EH applications in other appeals were taken up on 09.09.2021. The request for early hearing were allowed pursuant to the EH granted in earlier applications. These appeals were heard together and are disposed of by this common order. The details of appeals and cross objections disposed as per this order are as under :
