Service Tax
TRT-2025-
Cestat Chennai
Date:-22-01-24
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 22 January 2024
Parties: M/s. JSW Steel Limited Vs Commissioner of G.S.T. and Central Excise
Facts –
- The Appellant, M/s. JSW Steel Limited, is engaged in the manufacture of iron and steel products.
- A show cause was issued by extending the larger period of limitation under Section 73(1) of the Finance Act, 1994, alleging that Royalty and Forest Development Tax paid to the Monitoring Committee for auction purchases of iron ore was a consideration paid for the services of assignment of right to use natural resources by the Government of Karnataka and that the assessee was liable to pay service tax under reverse charge mechanism.
Issue –
- Whether the appellant is liable to pay service tax on Royalty and Forest Development Tax?
Order –
- The Tribunal observed that it is clear from Section 9 of the Mines and Minerals (Development and Regulation) Act, 1957 that the Royalty is to be paid by the holder of the mining lease. Therefore, the liability in respect of the payment of Royalty is fastened by law on the lease-holder and not on the buyers like the appellant.
- Further, it was as per the directions of Hon’ble Apex Court that the Monitoring Committee was required to collect the Royalty, taxes and other applicable charges from the auction buyers of iron ores and deposit the same with the Government. This is clearly evidenced by the samples of invoices/e-mails that were filed along with the appeal papers. The said tax has been deposited by the Monitoring Committee under the name and service tax registration of the holders of the mining leases in the State of Karnataka.
- Therefore, the payment of Royalty, FDT and other applicable taxes/charges by the buyers of the iron ores to the Monitoring Committee, as per the price of iron ore purchased in auction, would not be held to be liable to Service Tax and hence, the buyer i.e., the appellant herein, could not be held to be the service recipient from the State Government for the purposes of liability to Service Tax.
- The Appeal is allowed.
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