The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench ruled that service of granting of mining rights provided by the Government will not fall under the category of “support services”.
The assessee, the Mining Engineer, Department of Mines and Geology, Government of Rajasthan was issued show cause notices demanding service tax under the category of “Renting of immovable Property Service” for the period 01.07.2012 to 31.03.2016. After adjudication, by various orders, the original authority confirmed the demand, interest and penalties. Aggrieved by the decision of confirmation of demand, interest and penalty, the assessee has filed appeals. Revenue has also filed appeals against the order passed by adjudicating authority who has granted benefit of reduced penalty and also against order of Commissioner (Appeals) who has set aside the demand.
The revenue contended that the Department of Mines and Geology, Government of Rajasthan, the assessee herein collected “dead rent‟ as well as “royalty‟ on lease agreements entered for granting mining rights. The dead rent is a fixed amount which is collected by the assessee for giving the land on lease and royalty is being collected for the right to use the land for mining purposes. The royalty depends on the quantity of ore mined by the lessee. The lessee thus requires to pay dead rent or royalty whichever is higher. The lessee has to pay minimum annual royalty as dead rent to the assessee in four equal quarterly instalments.
various services provided by the Government and are not eligible to service tax, however, when these services fall within the definition of „support services‟, even if provided by the Government they are subject to levy of service tax. As per the definition of „support services‟, „Renting of immovable property‟ is a kind of support service and is taxable for the impugned period even if it is provided by the Government. Moreover, w.e.f. 01.04.2016, the words “support service” was omitted and the word “any service” was inserted in the said entry. As a consequence thereof, with effect from 01.04.2016, any service provided by Government to business entities which do not fall under (i) to (iii) of 66D (a) are chargeable to service tax.
The coram of Judicial Member, Sulekha Beewi C.S. and Technical ruled that the assessee being the Department of State of Rajasthan, the allegation that they have wilfully and deliberately suppressed facts is without any basis. The details of lease deed, royalty and dead rent collected etc. are reflected in the accounts. No particular positive act of wilful and deliberate suppression has been unearthed by Revenue with cogent evidence. Further, in the present case, there is clarification issued by the Board that grant of mining rights is not support service. For these reasons, the tribunal held that demand raised invoking the extended period cannot sustain. The assessee succeeds on the issue of limitation also.
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