Custom, Excise & Service Tax Tribunal
National Aluminium Co Ltd vs Commissioner-Bbsr Commissionerate on 21 March, 2024
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.1
Service Tax Appeal No.75030 of 2020
(Arising out of Order-in-Original No.PR.COMMR/BBSR/ST/17/2019 dated 10.10.2019
passed by Principal Commissioner, GST & Central Excise, Bhubaneswar.)
M/s. National Aluminium Company Limited
(Mines & Refinery Complex, Damanjodi, Koraput, Orissa-763008.)
...Appellant
VERSUS
Commissioner of CGST & CX, Bhubaneswar Commissionerate
.....Respondent
(C.R. Building, Rajaswa Vihar, Bhubaneswar-751007, Odisha.) APPEARANCE Shri Jnanesh Mohanty & Ms. Shreya Mundhra, both Advocates for the Appellant (s) Shri K.Chowdhury, Authorized Representative for the Revenue CORAM: HON'BLE SHRI ASHOK JINDAL, MEMBER(JUDICIAL) HON'BLE SHRI K. ANPAZHAKAN, MEMBER(TECHNICAL) FINAL ORDER NO. 75655/2024 DATE OF HEARING : 21.03.2024 DATE OF DECISION : 21.03.2024 Per : ASHOK JINDAL :
A demand of service tax has been confirmed against the appellant along with interest and penalty under section 78(1) of the Finance Act, 2 Service Tax Appeal No.75030 of 2020 1994 was also imposed on the appellant on the amount of mining royalty paid by the appellant.
2. The facts of the case are that the appellant entered with an agreement with the Government of Odisha for extraction of Bauxite Ore from the Bauxite Mines located at Damanjodi. In terms of the lease agreement, the appellant used to pay mining royalty and fees towards District Mineral Foundation (DMF) and National Mineral Exploration Trust (NMET) to the Government of Odisha on monthly basis in respect of quantum of ore raised during a calendar month. The royalty and other said charges are computed on the basis of clearance/dispatch of bauxite made during a month and payable by them before 25th day of the succeeding month. Accordingly, the royalty and other charges in respect of the quantity of bauxite produced during the month of March 2016 are payable and paid by the appellant during the month of April, 2016. The royalty paid to the Government on mining of Bauxite Ore came under the purview of service tax w.e.f. 01.04.2016 by virtue of Notification No.22/2016-ST dated 13.04.2016. Therefore, the service tax was leviable on the amount of mining royalty, under the category of allocation of natural resources by Government, in terms of the aforesaid Notification read with CBEC Circular No.192/02/2016 dated 13.06.2016.
3. An intelligence was gathered that the appellant has not paid service tax on the amount of consideration in the form of Royalty paid to the Government from April 2016 to September 2016, for the assignment of right to use natural resources, the Directorate General of Goods & Service Tax Intelligence (DGGSTI), Bengaluru Zonal Unit initiated investigation proceedings against the appellant. During the course of investigation by the DGGSTI, the appellant discharged its service tax liability on the mining royalty paid to the Government of Odisha in respect of the period April, 2016 to September, 2016. In addition to the payment of service tax, interest was also paid by the appellant. Subsequently to discharge of Service Tax liability, a show cause notice dated 14.12.2017 was issued to the appellant for the 3 Service Tax Appeal No.75030 of 2020 entire amount of service tax of Rs.12,24,13,844/- along with interest and equal amount of penalty for the period of March 2016, for which the payment was made in April, 2016. The appellant contested the charge stating that as the levy of service tax came into effect w.e.f. 01.04.2016, therefore, no demand can be raised for the mining royalty paid for the month of March 2016, although paid in April 2016, but the matter was adjudicated and the demand of service tax was confirmed along with interest and penalties are also imposed. The amount already paid was appropriated. Aggrieved from the said order, the appellant is before us.
4. The Ld.Counsel appearing on behalf of the appellant submits that the mining royalty came into service tax net in terms of Notification No.22/2016-ST dated 13.04.2016 w.e.f. 01.04.2016. The appellant is contesting the payment of service tax for the mining activity undertaken by the appellant in the month of March 2016 only. It is his contention that although payment was made in the month of April, 2016, but mining was done by the appellant in the month of March 2016 when the said Notification was not in force. Therefore, the appellant is not liable to pay service tax.
5. It is his contention that prior to 01.04.2016, barring a few exceptions such as support services, all services provided by the Government were covered under the negative list and accordingly, not subjected to service tax. It is his submission that in terms of Notification No.18/2016-ST dated 01.03.2016 issued by the CBIC amending serial no.6 of the Notification No.30/2012-ST dated 20.06.2012 to the effect that any service provided by the Government would be chargeable to service tax under reverse charge w.e.f. 01.04.2016, therefore, prior to such date, the provisions relating to reverse charge pertained to "services provided or agreed to be provided by Government or local authority by way of support services excluding ..............", therefore, till 31.03.2016, only in case of support service provided by the Government, the recipient of the service was liable to pay service tax under reverse charge. The impugned service of 4 Service Tax Appeal No.75030 of 2020 allocation of natural resources, does not fall under 'support service' as defined under section 65B(49) of the Finance Act, and was therefore not liable under reverse charge mechanism. It is his submission that appellant received services in relation to assignment of right to use natural resources from the State Government of Odisha in the month of March 2016, therefore, provision of service tax as were in force prior to 01.04.2016, would be applicable. It is further submitted that grant of natural resources was not excluded from the scope of negative list prior to 01.04.2016, therefore, no service tax implication can be fastened on the appellant. He also relied on the decision of this Tribunal in the case of Principal Commissioner v. S.R. Traders [2023 (9) Centax 407 (Tri.- Del.), which was affirmed by the Hon'ble Apex Court as reported in 2023 (9) Centax 408 (SC). Therefore, he prayed that the impugned order be set aside.
6. On the other hand, the Ld.AR for the department reiterated the findings of the impugned order.
7. We find that short issue before us is that whether the mining royalty paid by the appellant for mining to Government of Odisha in the month of April 2016 for the quantity of Ore extracted in the month of March 2016 is liable to pay service tax which came into service tax net w.e.f. 01.04.2016 or not ?
8. We find that the said issue has been examined by this Tribunal in the case of S.R. Traders (supra), wherein this Tribunal has observed as under:-
"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)
9. The said order has been affirmed by the Hon'ble Apex Court, in that circumstances, following the decision of this Tribunal in the case of 5 Service Tax Appeal No.75030 of 2020 S.R. Traders (supra), we hold that the appellant are not liable to pay service tax on the royalty paid for mining of Bauxite Ore in the month of March 2016, although the payment of royalty was made in the month of April 2016.
10. In that view, we do not find any merits in the impugned order and the same is set aside.
11. In the result, the appeal is allowed with consequential relief, if any.
(Operative part of the order was pronounced in the open Court.) Sd/ (ASHOK JINDAL) MEMBER (JUDICIAL) Sd/ (K. ANPAZHAKAN) MEMBER (TECHNICAL) sm