Custom, Excise & Service Tax Tribunal
National Aluminium Co Ltd vs Commissioner-Bbsr Commissionerate on 3 September, 2024
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
KOLKATA
REGIONAL BENCH - COURT NO.1
Service Tax Appeal No.75500 of 2022
(Arising out of Order-in-Appeal No.66/ST/BBSR-GST/2022 dated 23.03.2022 passed
by Commissioner (Appeals) of GST,Excise & Customs, Bhubaneswar)
M/s National Aluminium Company Limited
(Mines & Refinery Complex, PO-Damanjodi, Dist.-Koraput, Pin-763008, Odisha)
Appellant
VERSUS
Commissioner of GST,Excise & Customs, Bhubaneswar
(C.R.Building, Rajaswa Vihar, Bhubaneswar-7, Odisha)
Respondent
APPERANCE :
Shri Jnanesh Mohanty & Ms.Shreya Mundhra, both Advocates for the Appellant Shri S.Mukhopadhyay, Authorized Representative for the Respondent CORAM:
HON'BLE MR.ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE MR.K.ANPAZHAKAN, MEMBER (TECHNICAL) FINAL ORDER NO.76921/2024 DATE OF HEARING : 03 .09.2024 DATE OF DECISION : 03.09.2024 Per Ashok Jindal :
The appellant is in appeal against the impugned order wherein the service tax has been charged on the water charges paid to the Government of Odisha for supply of water against the charges as per the specified rate stipulated in terms of the Agreement for the period April 1, 2016 to June 30, 2017.
2. The facts of the case are that the appellant is engaged in the manufacture of aluminium.
2.1 The present dispute in the present case, arises relating to levy of service tax on water charges paid by the appellant to the Government 2 S.Tax Appeal No.75500 of 2022 of Odisha for supply of water against charges/consideration at a specified rate stipulated in the Agreement dated 29.09.1988. 2.2 It was observed that the supply of water by the Government from natural water sources i.e. Kerandi River of Upper Kolab Reservoir to the appellant falls under the category of "allocation/auction of natural resources", which is liable to pay service tax w.e.f. 01.04.2016. 2.3 Therefore, a show-cause notice was issued to the appellant on 20.03.2019 by invoking extended period of limitation to demand service tax from the appellant for the period April 1, 2016 to June 30, 2017. 2.4 The matter was adjudicated. The demand of service tax was confirmed.
2.5 Aggrieved from the said order, the appellant is before us.
3. The ld.Counsel for the appellant submits that the issue has settled by this Tribunal in the case of Paradeep Phosphates Limited Vs. Commissioner of CGST & Excise, Bhubaneswar I vide Final Order No.76069/2024 dated 07.06.2024. Therefore, the impugned order to be set aside.
4. The ld.A.R. for the Revenue supported the impugned order.
5. Heard both the parties and considered the submissions.
6. We find that the present issue has been settled by this Tribunal in the case of Paradeep Phosphates Limited (supra), wherein this Tribunal has observed as under :
"6. We find that the issue involved in this matter is whether the appellant is liable to pay service tax in terms of Section 65B (44) of the Finance Act, 1994 under the category of "allocation/auction of natural resources" or not ? The said issue 3 S.Tax Appeal No.75500 of 2022 has been examined by this Tribunal in the case of Sasan Power Limited (supra), wherein this Tribunal has observed as under :
"16. Section 40 of the Madhya Pradesh Irrigation Act, as noticed above, deals with supply of water for industrial, urban or other purposes and it provides that the charges shall be as agreed upon between the State government and the company and fixed in accordance with the rules made under the Act. Rule 71A also provides that water may be supplied with the prior permission of the State government for any industrial purpose to a private person at the rates not less than the rates specified in Column (3) of the Table.
17. The Title of the Agreement also shows that it was for supply of water to the industrial power plant. The appellant was required to pay water charges to the government for the water drawn by it from the government water source at the rates fixed by the Water Department which would be Rs.5.50/- per cubic meter. In addition, the appellant was also required to pay local fund cess or any other tax as may be fixed by the government. The appellant was required to make its own arrangement at its own cost for drawl of water from the water resource of the government to the plant. The Agreement also specifically provided that the government has not given any guarantee for the uninterrupted supply of water during and the government also would not be responsible for non supply or inadequate supply of water as a result of any event of Force Majeure. The appellant has to pay water rates/water charges depending on the quantity of water drawn by the appellant. The Agreement also deals with a situation where there can be reduction or shortage in the water supply. This clearly means that the Agreement is for supply of water and not mere access to water source.
18. It is, therefore, more than apparent that the Agreement is for supply of water by the government to the 4 S.Tax Appeal No.75500 of 2022 appellant and is not for assignment of any right to the appellant to use the natural resources of the government.
19. The appellant is, therefore, justified in asserting that the Agreement executed between the appellant and the government is for supply of water for which charges are paid by the appellant on the basis of volume of water drawn and it is not a case of assignment of right to use natural resources of the government.
20. In this view of the matter no service was provided by the government to the appellant. The impugned order, therefore, deserves to be set aside on this ground alone."
7. As the issue in this case has been examined by this Tribunal in the case of Sasan Power Limited (supra), we hold that the payment made by the appellant for water charges, is not liable to be service tax during the impugned period for allocation/auction of natural resources. We, therefore, hold that the appellant is not liable to pay the service tax on water charges paid by them.
8. In view of the above observations, we set aside the impugned order and allow the appeal with consequential relief, if any."
As this issue has been examined by this Tribunal in the case of Sasan Power Limited Vs. Commissioner of CGST & Excise, Jabbalpur vide Final Order No.55672/2024 dated 30.04.2024, which is followed by this Tribunal in the case of Paradeep Phosphates Limited (supra), we hold that the issue is no more res integra and the water charges paid by the appellant is not liable to pay service tax during the impugned period for allocation/auction of natural resources.
7. Therefore, no service tax is payable by the appellant. Consequently, no penalty is imposable on the appellant. 5 S.Tax Appeal No.75500 of 2022
8. In the above terms, we set aside the impugned order and allow the appellant with consequential relief, if any.
(Operative part of the order was pronounced in the open court) (Ashok Jindal) Member (Judicial) (K.Anpazhakan) mm Member (Technical)