Shrawan Kumar Pathak Vs Commissioner of Central Excise & Central GST (CESTAT Delhi)
The appellant is engaged in mining of minerals. It has obtained lease for the State Government of Madhya Pradesh. It paid royalties to the State. A demand of service tax of about Rs.2 crores, along with interest and penalties, on reverse charge basis, was confirmed on the appellant on such royalty paid to the State Government. Hence, appeal.
The Hon’ble CESTAT, New Delhi allowed the appeal and set aside the order.
It held:
(i) the agreement was entered into prior to 01.04.2016 and hence, could not be subjected to service tax as it was covered by the negative list of services (Section 66D), though royalties have been paid thereafter;
(ii) follows decision in the case of Madhya Pradesh State Mining Corporation case against which appeal filed by Revenue has been dismissed by the Supreme Court;
(iii) holds circular dated 13.04.2016 is contrary to law and cannot be relied upon;
(iv) the impugned order violates judicial protocol as it ignores judicial precedence.
The matter was argued by Ld. Counsel Bharat Raichandani
FULL TEXT OF THE CESTAT DELHI ORDER
The appellant herein is engaged in activity of extraction of mineral from mines and are paying royalty to the state government. Department got an intelligence that the appellants are not registered under service tax despite that they are liable to pay service tax under reverse charge mechanism on royalty charges paid to the state government. Investigation was conducted based on the said intelligence, and it was found that Service tax amounting to Rs.1,90,42,457/- has not been paid by the appellant during the period 01.04.2016 to 30.06.2017, and by not paying the same, the appellant has actually suppressed the fact of their liability towards the government Exchequer. With these observations, a Show Cause Notice number 144134/2021 dated 25th March 2021 was issued involving extended period of limitation and was served upon the appellant proposing the recovery of the aforesaid amount (1,90,42,457/-) of service tax along with the interest and proportionate appropriate penalties. The proposal was initially confirmed vide Order-in-Original number 11 / 2021-22 dated 17-112021. Appeal filed against the said order has been rejected vide Order-in-Appeal number 26/2022-23 dated 22.02.2023. Still being aggrieved, the appellant is before this Tribunal.
