National Aluminium Company Limited Vs Commissioner of CGST & CX (CESTAT Kolkata)
The Customs, Excise and Service Tax Appellate Tribunal, Kolkata considered whether service tax was payable on mining royalty paid by the appellant to the Government of Odisha in April 2016 for bauxite ore extracted during March 2016.
The appellant had entered into an agreement with the Government of Odisha for extraction of Bauxite Ore from the Bauxite Mines at Damanjodi. Under the lease agreement, mining royalty and fees towards District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) were payable monthly based on the quantity of ore raised. The royalty and other charges relating to bauxite produced during March 2016 became payable and were paid in April 2016.
Mining royalty came within the purview of service tax with effect from 01.04.2016 by virtue of Notification No.22/2016-ST dated 13.04.2016, read with CBEC Circular No.192/02/2016 dated 13.06.2016. During investigation by the Directorate General of Goods & Service Tax Intelligence (DGGSTI), Bengaluru Zonal Unit, the appellant paid service tax and interest on mining royalty for April 2016 to September 2016.
A show cause notice dated 14.12.2017 was subsequently issued for service tax of Rs.12,24,13,844/- along with interest and an equal amount of penalty in respect of the royalty relating to March 2016, which had been paid in April 2016. The appellant contested the demand on the ground that the mining activity was undertaken in March 2016, when the relevant service tax levy was not in force.
