The government of Rajasthan has claimed a huge relief of 6315 crore in a service tax dispute of a long-term, in a major legal win. The Customs, Excise and Service Tax (CESTAT) tribunal in New Delhi, however, has upheld the decision made by the Department of Mines and Petroleum in the state, overruling the earlier decision by the Jodhpur CGST Commissioner. The tribunal explained that mining rights are not subject to the negative list of services (those exempted from service tax) under the section of services termed as support services.
T. Ravikant (Principal Secretary of Mines and Petroleum), was clarifying that the decision was based on the Central Board of Excise and Customs (CBEC) guidelines circulated on June 20, 2012. The guidelines had made it clear that the mining rights do not fall in the category of auxiliary services. Following these guidelines, the department was able to properly prove its point in the tribunal and record a landmark triumph in court.
The case involved service taxes, interest, and penalties on royalty and dead rent on the amount extracted through mineral oil and natural gas in Barmer and Jaisalmer areas in the period between 2013 and 2016. Previously, this revenue was categorised under the head of rents on immovable property by Jodhpur CGST Commissioner, which led to a demand of 1657.71crore of CGST tax, around 3000crore of CGST interest and also an equal amount as a penalty.
But the appellate tribunal noted that even mining lease land is not the property of the state government, which considers the lease on royalty and dead rent not as rent but as compensation for mining. Chartered Accountant Ritul Patwa appeared on behalf of the state and made a strong case as Petroleum Director Ajay Sharma assured that the June 25 order would not only bring relief in the present case but would also create an important precedent in such cases in future.
Join our whatsapp group for Latest updates
Click Here for Chhattisgarh News
Click Here for Entertainment News