Custom, Excise & Service Tax Tribunal
Cesc Ltd. vs Howrah Commissionerate on 8 July, 2025
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO. 1
Service Tax Appeal No. 75260 of 2023
(Arising out of Order-in-Original No.30/Commr/CGST & CX, KOL-NORTH/2022-23
dated 16.03.2023 passed by Commissioner of CGST & CX, Howrah)
CESC Ltd. : Appellant
CESC House,
Chowringhee Square,
Kolkata-700001
VERSUS
The Commissioner of Central Tax, CGST & Central : Respondent
Excise, Kolkata, 15/1 Strand Road, Kolkata APPEARANCE:
Shri Arvind Bahety, Advocate for the Appellant Shri D.Sue, Authorized Representative for the Respondent CORAM:
HON'BLE SHRI ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE SHRI K.ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO. 76724/ 2025 DATE OF HEARING :19.06.2025 DATE OF DECISION: 08.07.2025 Order : [Per Shri Ashok Jindal] The appellant is in appeal against the impugned order wherein demand of Rs. 14,70,63,835/- has been confirmed alongwith interest in equivalent amount of penalty for the period April, 2016 to June, 2017 on account of taxability of royalty and other periodical payments made to Government of West Bengal/alleged local authorities after 01.04.2016 under reverse charge provisions for the assignment of right to use coal from Sarisatolli Coal Block with respect to which mining rights were conferred prior to 01.04.2016.
2. The facts of the case are as under:
2Appeal No.: ST/75260/2023-DB "The Appellant participated in the public auction of mining rights of the Sarisatolli Coal Mine (hereinafter referred to as „mine‟), conducted by the Ministry of Coal, Government of India under the Coal Mines (Special Provisions) Act, 2015 (hereinafter referred to as „Coal Mines Act‟). Having emerged as the successful bidder, the Appellant entered into a Coal Mine Development and Production Agreement (CMDPA) dated 02-03-2015 with the President of India, paving way for the grant of mining lease by the Government of West Bengal (hereinafter referred to as „Govt of WB‟). In accordance with Sections 8(8) and 8(10) of the Coal Mines Act, the mining lease was deemed to be effective from 22-04-2015, as confirmed videby a letter dated 22-04-2015 issued by the Govt. of WB and subsequently formalized through the execution of a Mining Lease Deed on04-11-2015(mining lease). As per clause 9 of Part IX of the mining lease, the terms and conditions under the CMDPA were incorporated in the mining lease as a part and parcel thereof.
The CMDPA and the mining lease are hereinafter collectively referred to as „mining agreements‟.
4.3. By reason of grant of mining rights, the Appellant was required to make payments of the following amounts(hereinafter collectively referred to as „amounts‟) in terms of mining agreements:
i. Royaltylevied under Section 9 of the Mines and Minerals (Development & Regulation) Act, 1957 (MMDR Act) to the Govt of WB 3 Appeal No.: ST/75260/2023-DB ii. Additional Premium as well as fixed ratesto the Govt of WB iii. Contribution to District Mineral Foundation (DMF) under Section 9B of the MMDR Act to the Burdwan District Mineral Foundation iv. Contribution to National Mineral Exploration Trust (NMET) under Section 9C of the MMDR Actto the NMET Fund Collection West Bengal In addition to the above, the Appellant was also required to pay the Asansol Mines Board of Health (AMBH) fees to the AMBH under Section 23 of the West Bengal Mining Settlements (Health and Welfare) Act, 1964 (Mining Settlements Act).
4.4. The Appellant appointed M/s Integrated Coal Mining Limited (ICML) as a job worker for carrying out its mining operations, including production and delivery of coal, for captive consumption of the extracted coal. It is to be noted that since the extraction of coal from the mine qualified as a manufacturing activity under the Central Excise Act, 1944, the said amountsformed part of the cost of production of the coal and therefore, ICML used to discharge excise duty on the same. The said fact has also been verified and accepted by the department. 4.5. Prior to 01-04-2016, only "support services" provided by Government or a local authority was taxable in terms of Section 66D(a)(iv) of the Finance Act, 1994. However, with effect from 01-04- 2016, all services provided by the government were brought under the 4 Appeal No.: ST/75260/2023-DB service tax net by virtue of amendment to Section 66D(a)(iv).
4.6. Pursuant to an investigation,invoking extended period of limitation, a show cause notice bearing no.
1388/KZU/KOL/Gr.C/17/Part-I/2666 dated 31-05-2021 (hereinafter referred to as „notice‟), was issued by the Additional Director General, DGGSTI, alleging that the Appellantwas required to discharge service tax of Rs. 14,70,63,835/- (including cess),along with interest and penalty,on the amounts paid to the Govt of WB during the period April 2016 to June 2017 (hereinafter referred to as „relevant period‟)on reverse charge basisin terms of amended Section 66D(a)(iv) of the Finance Act, 1994 read with Notification No. 30/2012 dated 20-06-2012.
4.7 .The Appellant duly submitted its reply to the show cause notice, raising various alternate grounds in support of its contentions. However, disregarding the Appellant‟s submissions, the Commissioner of Central Tax (hereinafter referred to as „Ld. Adjudicating Authority‟), vide the Order- in-Original bearing No.30/Commr./CGST & CX/KOL-NORTH/2022-23 dated 16-03-2023 (hereinafter referred to as „impugned order‟), confirmedthe demands raised in the notice.
4.8. Hence the Instant Appeal."
5Appeal No.: ST/75260/2023-DB
3. Ld. Counsel for the appellants submits as under:
"Contentions of the Appellant The Appellant challenges the demands confirmed in the impugned order both on merits andlimitation on the following grounds, which are in the alternative and without prejudice to one another.
A. Issue involved herein as regards taxability of amounts paid made under the mining lease executed prior to the introduction of levy w.e.f. 01-04-2016 is no more res integra and stands concluded.
A.1 It is humbly submitted that prior to 01-04-2016, only "support services" provided by Government or a local authority was taxable in terms of Section 66D(a)(iv) of the Finance Act, 1994.However, with effect from 01-04-2016, all services provided by the government were brought under the service tax net by virtue of amendment to Section 66D(a)(iv).
A.2 It is humbly submitted that a subsequent levy does not affect the taxability of an activity executed/carried out prior in time merely because the consideration for the same is received in staggered manner spilling even after the introduction of levy.In the present case, the Appellant acquired the mining rights for 6 Appeal No.: ST/75260/2023-DB extraction of coal before 01-04-2016.It is submitted that whether levy of service tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided. Since the miningagreementsgrantingthe mining rights were executed priorto 01-04-2016, i.e.,the date on which the transaction of grant of right to use natural resources became taxable, the Appellant would not be liable to pay the service tax thereon.
A.3 The aforesaid proposition finds support from the various judgements of the Hon‟ble Tribunals and the Supreme Court, whereby it has been held that when the assignment of right to use natural resources was made before 01-04-2016, service tax liability cannot be fastened upon the Appellant even if the consideration for the same is paid after the amendment of Section 66D(a)(iv):
i. Principal Commissioner of CGST and Central Excise Vs. SR Traders[(2023) 9 Centax 407 (Tri - New Delhi)] - affirmed in (2023) 9 Centax 408 (SC) ii. M/s. Shrawan Kumar Pathak vs Commissioner of Central Excise [Final Order NO.55580/2024 - CESTAT New Delhi] iii. Cement Corporation of India Ltd vs Commissioner of CGST, Central Excise, Guwahati [2024 (6) TMI 192 - CESTAT Kolkata] 7 Appeal No.: ST/75260/2023-DB A.4 Further, it is humbly submitted that the payments towards contribution to DMF and NMET under Section 9B and 9C of the MMDR Act are measured with reference to the underlying royalty payments. As such, these contributions may be regarded as an extension of royalty, since they arise solely by virtue of the grant of a mining lease. While the purpose of these payments is different, as outlined in the respective sections and the rules framed thereunder, their basis remains connected to the royalty basis. Further, the Hon‟ble Tribunal, in the case of Shrawan Kumar Pathak (supra), has already taken a view that no service tax liability arises on DMF and NMET payments made in terms of the mining lease assigned prior to 01-04-2016.
A.5 In light of the above cited judicial precedents, the Appellant cannot be held liable to discharge service tax on the said amounts.
B. Without prejudice to the above, the amounts with respect to which service tax is sought to be recovered in these proceedings have suffered excise duty as part of cost of production of coal raised.
Consequently, the same cannot be subjected to service tax in view of Section 66D(f) of the Finance Act, 1994.
B.1 The activity of extraction of coal from the mine is construed as production of excisable goods and is subject to excise duty under Section 3 of the Central Excise Act, 1944.Since the 8 Appeal No.: ST/75260/2023-DB amountspaid to the Govt of WB were directly attributable to the activity of raising of coal, these payments were being included in arriving at the cost of production of coal.The Appellant hadduly discharged excise duty on the coal produced and captively consumed in accordance with the provisions of Rule 8 read with Rule 11 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 through its job worker. The said fact has also been verified and accepted by the Ld. Adjudicating Authority.
B.2 In accordance with Section 66D(f) of the Finance Act, 1994, services by way of carrying out any process amounting to manufacture or production of goods cannot be subjected to service tax. Moreover, there are plethora of judgements wherein it has been held that there cannot be a simultaneous levy of central excise duty and service tax on the same activity. Reliance in this regard is placed on:
i. Osnar Chemical Pvt. Ltd. Vs CCE, Bangalore [2009 (240) ELT 115 (Tri. - Bang.)] - affirmed in 2012 (276) ELT 162 (SC) ii. Ericsson India Pvt. Ltd. Vs CCE [2013 (294) ELT 599] iii. Sri Rama Vilas Service Vs Commr. of C. Ex. [2019 (25) G.S.T.L. 117 (Tri. -
Chennai)] iv. M/s Integrated Coal Mining Ltd. Vs Commr. of CGST&C.Ex. [FINAL ORDER NO.76435/2025] 9 Appeal No.: ST/75260/2023-DB B.3 In light of the above judicial precedents, it is submitted that since the Appellant has already discharged excise duty on the activity of raising coal albeit through its job worker, and the amountsin question have been duly factored into the cost of production, such amounts have already suffered incidence of excise duty. Accordingly, the same amounts cannot be subjected to service tax simultaneously.
C. Without prejudice to the above, the entire proceedings are hit by limitation in as much as no wilful suppression or intent to evade tax can be attributed on the part of the Appellant.
C.1 The impugned order alleges that the Appellant suppressedthe value of services received from the Government or local authority in its ST- 3returns, with an apparent intent to evade payment of service tax. In this regard, it is respectfully submitted that the Appellant was granted mining rights through a public auction conducted under central legislation by the Ministry of Coal, and the corresponding mining lease deed was executed between the Appellant and the Govt of WB.
C.2 Further, the Appellant's excise returns were subject to provisional assessment in terms of the Central Excise Act, 1944 and the relevant rules. It is pertinent to note that the officials functioning under both the Central Excise and Service Tax departments are essentially the same, and bothoperate under the administrative 10 Appeal No.: ST/75260/2023-DB control of the Central Board of Indirect Taxes and Customs. In view of the above, it is submitted that the grant of the mining leaseand the associated payment of excise dutyon the relevant amounts werewell within the knowledge of the department, thereby rendering the allegation of suppression completely untenable.
C.3 Moreover, the Appellant was and is under bonafide belief that the amountspaid are not exigible to Service Tax and hence the same was neither disclosed in the ST-3 returns of the Appellant nor service tax was paid thereon. Further, the Appellant submits that it being a public company, the financials of the Appellant are publicly available documents wherein the details pertaining to the grant of themining rightshad been duly disclosed and hence the grounds for material suppression of facts cannot be taken by the Department to invoke extended period of limitation. Reliance in this regard is placed on the following judgements:
i. C.S.T., New Delhi Vs Kamal Lalwani [2017 (49) S.T.R. 552 (Tri. - Del.)] ii. Mega Trends Advertising Limited Vs. Commissioner of Central Excise and Service Tax, Lucknow [2020 (38) G.S.T.L. 57] iii. M/s. Calcutta Club Ltd. Versus Commr. of Service Tax-II, Kolkata [2025 (6) TMI 764 - CESTAT KOLKATA] C.4 In any event, it is a settled principle in law that extended period of limitation can be invoked 11 Appeal No.: ST/75260/2023-DB only when the twin conditions of fraud, collusion, wilful misstatement or suppression of facts along with an intent to evade payment of duty must be satisfied. Further, it is the duty cast upon the department to establish concealment or suppression of facts in order to invoke an extended period of limitation which has not been discharged in the facts of the present case. Mere failure to pay duty/non-payment of duty without any positive act to evade cannot be equated with suppression of facts and hence extended period of limitation cannot be invoked. Reliance in this regard is placed on the following judgements:
i. Uniworth Textiles Limited Vs Commissioner of Central Excise, Raipur [2013 (288) E.L.T. 161 (S.C.)] ii. Collector of Central Excise Vs Chemphar Drugs and Liniments [1989 (40) E.L.T. 276 (SC)] C.5 In light of the above, it is submitted that the allegation of suppression of material facts fails outright without any evidence whatsoever in support thereof. Therefore, the entire proceedings are hit by limitation in as much as no wilful suppression or intent to evade tax can be attributed on the part of the Appellant.
D. Grounds with regard tocontributions to DMF and NMET and AMBH fees.
D.1 In any event, the payments of AMBH fees to the AMBH could not be subjected to 12 Appeal No.: ST/75260/2023-DB service tax on reverse charge in light ofSl. No. 39 of the Notification No. 25/2012 dated 20-06-2012 D.1.1 Without prejudice to the above, it is respectively submitted thatAMBH fees is levied and collected under Section 23 of the Mining Settlement Act to provide for planned construction of building and structures, proper sanitation, water supply, health etc. in an area in which the employees of Mines reside, notified as mining settlement, by the Mines Board of Health constituted as a body corporate.
D.1.2 Mining Settlement Act applies to an area not included within a Municipality and the functions discharged by the Board are akin to the functions entrusted to a Municipality under Article 243W of the Constitution read with the Twelfth Schedule thereof (refer Sl. No. 5 and 6). The Mines Health Board also qualifies as a Governmental Authority as defined under para 2(s) of the Notification No. 25/2012 dated 20- 06-2012. Accordingly, in light of Sl. No. 39 of the said Notification, the services provided by the AMBH are exempt from the levy of service tax.Consequently, the demand of service tax on AMBH fees, amounting to Rs. 4,81,899/-, is wholly unfounded and unsustainable.However, the Ld. Adjudicating Authority has not even dealt with the said contention despite having been specifically adverted to.
D.1.3 Without prejudice to the above, the Mines Board of Health does not qualify as Government or a Local Authority under service tax law and 13 Appeal No.: ST/75260/2023-DB therefore, services provided by AMBH is outside the scope of Notification No. 30/2012-ST, making the reverse charge provisions inapplicable.
D.2 The contributions to DMF and NMET, being non-profit trusts, by the Appellant cannot be subjected to service tax under reverse charge basis.
D.2.1 Without prejudice to the above, it is respectively submitted that DMF is a notified independent non-profit trust, established for benefit and interest of the people affected due to mining operations. Further, NMET, also an independent non-profit trust, is established forregional and detailed mineral exploration.
D.2.2 In this regard, it is submitted that service tax is payable on a reverse charge basis under Sl. No. 6 of Notification No. 30/2012 dated 20.06.2012, only in cases where services are received from the Government or a local authority. However, the District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) do not fall within the scope of "Government" or "local authority" as defined under Sections 65B(26A) and 65B(31) of the Finance Act, 1994, respectively.
D.2.3 Further, a perusal of the definition of "person"
under Section 65B(37) of the Finance Act, 1994, reinforces the view that such trusts are distinct and separate from the Government and local authorities. Moreover, these trusts are 14 Appeal No.: ST/75260/2023-DB constituted for purposes that are entirely different from those of the Government or local authorities.
D.2.4 Therefore, it is submitted that the provisions of the Notification No. 30/2012 dated 20.06.2012 are not applicable to AMBH fees as these payments cannot be regarded as consideration for services received from the Government or a local authority.Accordingly, services provided by such notified trusts do not fall within the ambit of Notification No. 30/2012-ST, and service tax, if at all applicable, is liable to be discharged under the forward charge basis, rather than under reverse charge.
D.2.5 In view of the foregoing, it is respectfully submitted that the demand of service tax in respect of contributions made towards DMF and NMET, amounting to Rs. 1,57,247/- (Rs. 1,31,039/- towards DMF and Rs. 26,208/-
towards NMET), is unfounded and
unsustainable."
4. On the other hand Ld. Authorized
Representative supported the impugned order.
5. Heard the parties. Considered the submissions.
6. The short issue involved in the matter is that whether the appellant is liable to pay Service Tax on royalty and other periodic payments made to Government of West Bengal /alleged local authorities after 01.04.2016 under reverse charge provisions for the assignment of right to use coal from Sarisatolli 15 Appeal No.: ST/75260/2023-DB Coal Block with respect to which mining rights were conferred prior to 01.04.2016 or not?.
7. We find that in this case the appellant has got the transfer of mining lease from the department of Commerce and Industries Mining Branch, Government of West Bengal, Kolkata on 22nd April, 2015.
8. For better appreciation of the fact the said order of transfer of mining lease is extracted here below:
16Appeal No.: ST/75260/2023-DB 17 Appeal No.: ST/75260/2023-DB
9. That facts are not in dispute therefore, issue arises that as mining lease documents has been executed prior to 01.04.2016, whether the appellant is liable to pay Service Tax or not?
10. The said issue has been examined by this Tribunal in the case of Principal Commissioner, CGST & Central Excise versus S.R.Traders reported in (2023) 9 Centax 407 (Tri.-Del) wherein in that case the Tribunal frame the following issue:
" 2. The issue involved in this appeal is regarding non-payment of service tax on the amount paid to the Government or a local authority towards periodical charges for assignment of right to use of natural resource or quarry sand from the allotted mines for the period April, 2016 to January, 2017"
and this Tribunal recorded as under:
"4. Though the agreements were entered prior to April 01, 2016 in the present case, the contention of the Department is that since the payment under the agreements were to be made after April 01, 2016, the appellant would be liable to pay service tax. "
and thereafter, this Tribunal observed as under:
"5. This precise issue came up before a Bench of the Tribunal in M's. Modhya Pradesh State Mining, Corporation Limited v. Principal Commissioner, CGST & Central Excise, Bhopal (MP) 2023 (4) TM) 1075- CESTAT New Delhi (20231.10 Centax 253 (Tri-Deli In regard to short payment of service tax on dead rent paid by the appellant to the State Government which was taxable on a reverse charge basis against the receipt of services conceming grant of mining rights, the Bench held that for the purposes of levying service tax, the taxable event is construed at the time the service is provided or agreed to be provided. Therefore, in order to determine whether 18 Appeal No.: ST/75260/2023-DB levy of services tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided and since the agreements berween the appellant and the State Government regarding grant of mining right were executed prior to April 01, 2016, on which dase the transaction in mining of right to use natural resources became taxable, the appellant would not be liable to pay the service tax The relevant portions of the decision are reproduced below:
"13. The second category of demand pertains to the alleged short-payment of tax to the extent of dead rent surface rent paid by the appellant to the State Government, which has been held to be taxable on reverse charge basis against the receipt of service concerning grant of mining rights.
14. The contention of the learned counsel for the appellant is that the demand is not sustainable as the service was received prior to 1-4-2016, when such services from the Government were not subject to tax
15. The charging provision prescribing levy of tax is section 668 of the Finance Act and it is as follows:
"66B. There shall be levied a tax (hereinafter referred to as the service tax at the rate of fourteen per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed."19
Appeal No.: ST/75260/2023-DB
16. Thus, for the purpose of levying service tax, the taxable event is construed as the time when the service is provided or agreed to be provided. Thus, in order to determine whether levy of tax is applicable on a particular activity, it is necessary to determine the point of time when such activity is provided or agreed to be provided. In the present case, the agreement between the appellant and State Government for grant of mining rights was executed on 2-1-2016 and on this date, the transactions involving) assignment of right to use natural resource was not taxable.
17. In this connection section 66D of the Finance Act, as it existed prior to 1-4-2016, can be referred to and it is as follows:
"66D The negative list shall comprise of the following services, namely:-
(a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere-
(1) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government,
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport,
(iii) transport of goods or passengers, or 20 Appeal No.: ST/75260/2023-DB
(iv) Support services, other than services covered under clauses (1) to (1) above, provided to business entities"
18. Thus, prior to 1-4-2016, barring a few exceptions, all services provided by the Government were covered under the negative list and accordingly, not subjected to service tax.
19. With effect from 1-4-2016, however, section 66D
(a)(iv) of the Finance Act was amended and 'all services provided by the government to a business entity were excluded from the negative list of services. Thus, services rendered by the government to a business entity became chargeable to service tax with effect from 1-4-2016.
20. In the present case, the appellant received services in relation to assignment of right to use natural resources from the State Government by virtue of the agreement dated 2-1-2016 and, therefore, the provisions of service tax, as were in force prior to 1-4-2016, would be applicable. Grant of natural resources was not excluded from the scope of negative list prior to 1-4-2016 and so no tax implication can be fastened on the appellant for such period"
(emphasis supplied)
6. Shri Harshvardhan, learned authorized representative appearing for the Department, however, placed reliance upon the grounds taken in the memo of appeal, particularly to ground no. 9.6 to contend that since the payments were received after 21 Appeal No.: ST/75260/2023-DB April 01, 2016, the appellant would be liable to pay service tax. The said ground is reproduced below:
"9.6 On going through the agreements it has been observed that all the contracts/agreements (for each sand quarry) have been executed allotted prior to the relevant date Le. 1-4-2016 (the date of Levy of Service Tax), for assignment of right to use of natural resource of such sand quarry on periodical charge (yearly basis in the name of thekadhan to be paid in four installments every year on 1st day of the quarter ie. 1-4-2016, 1-7-2016, 1-10-2016 & 1-1- 2018 for the year 2016-17 and similar/identical manner for the remaining future periods of the contract/agreement. There are no provisions for payment of one-time payment/charges in all the contracts involved in the SCN dated 1-3- 2017/impugned order dated 30-8-2018 Hence, the assessee is not entitled for any exemption from payment of service tax on the payments (Royalty payable periodically) made on & after 1-4-2016."
7. This ground has been taken in view of rule 7 of the Point of Taxation Rules 2011, which is evident from the Circular dated April 13, 2016 issued by the CBEC. The relevant portion of the Circular is reproduced below:
9 Whether Service Service Service Tax is payable on such Tax is payable on yearly installments in view of rule 7 of installments due after 1- point of Taxation Rules, 2011 as 4-2016 in respect of amended by vide Notification No. spectrum assigned 24/2016-S.T., dated 13-4-2016.
before 1-4-2016 However, the same have been after 1-4-2016 in specifically exempted vide Notification No. 25/2012-5.T, dated 20-6-2012 as amended by on Notification No. 22/2016-S.T., dated 13-4-2016 [Entry 61 refers). The exemption shall apply only to Service Tax payable on one time 22 Appeal No.: ST/75260/2023-DB charge, payable in full upfront or in installments, for assignment of right to use any natural resource and not to any periodic payment required to be made by the assignee, such as Spectrum User Charges, license fee in respect of spectrum, or monthly payments with respect to the coal extracted from the coal mine or royalty payable on extracted coal which shall be taxable
8. The Point of Taxation Rules deal with the date on which payment of service tax has to be made and do not determine whether the service is taxable or not. These Rules, therefore, would not be applicable in the present case. In any view of the matter, the issue is covered by the decision of the Division Bench of the Tribunal in Madhya Pradesh State Mining Corporation
9. It has, therefore, to be held that the order passed by the Commissioner does nor suffer from any illegality so as to call for any interference in this appeal. The appeal is, therefore, liable to be dismissed and is dismissed."
11. The said order has been affirmed by the Hon'ble Apex Court reported in (2023) 9 Centax 408 Supreme Court. The same view was taken by this Tribunal in the case of The Madhya Pradesh State Mining Corporation Limited vs. Pr. Commissioner, CGST & CX (2023) 10 Centax 253 (Tri-Delhi).
12. Admittedly in this case mining lease rights has been assigned to the appellant on 22nd April, 2015 23 Appeal No.: ST/75260/2023-DB which is well prior to 1st April, 2016. In that circumstances, following the decision of this Tribunal in the case of The Madhya Pradesh State Mining Corporation Limited (Supra) and S.R.Traders (Supra) which has been affirmed by the Apex Court, we hold that the royalty paid by the appellant is not taxable during the period April, 2016 to June, 2017.
13. In view of this we hold that demand is not sustainable against the appellant.
14. We further take note of the fact that the activity of extension of coal from coal block has suffered Excise Duty as part of the cost of production of coal raised therefore, no Service Tax can be leviable on the appellant. As activity undertaken by the appellant amounts to manufacture. The same view was taken by this Tribunal in the case of Integrated Coal Mining Ltd. Vrs. Commissioner of CGST and Central Excise (Supra).
15. In view of the above discussion we hold that no Service Tax can be demanded from the appellant. Accordingly, whole of the demand of the Service Tax is set aside. Consequently, no penalty is imposable on the appellant.
16. In view of this we set aside the impugned order and allow the appeal with consequential relief, if any.
(Pronounced in the open court on 08.07.2025) (ASHOK JINDAL) MEMBER (JUDICIAL) (K.ANPAZHAKAN) MEMBER (TECHNICAL) RG