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2024 (1) TMI 1018 - AT - Service TaxLevy of Service Tax - reverse charge mechanism - appellant has received any taxable service of lease of mine and assignment of right to use of natural resources from the State Government of Karnataka for mining of iron ore, on which the Royalty and Forest Development Tax/Fee or not - HELD 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. Sub- paragraph (F) below paragraph 5 of the Order of the Hon’ble Supreme Court dated 18.04.2013 in the case of Samaj Parivartana [2013 (4) TMI 954 - SUPREME COURT] merely lays down the manner in which the payment of these Royalties will be made. Sub-paragraph (F) stipulates that the buyer will make the payment of the Royalty, the liability of which lies primarily on the shoulders of the lease- holder. Merely because the payment is made by the buyer, it cannot automatically be said that the primary liability is on him, that any relatable services were received by him, or indeed that the leaseholder is absolved of liability - Accordingly, the payment of the Royalty being the primary obligation of the lease- holder, it cannot be said that the services, if any, relatable thereto, could have been rendered to the buyer (the Appellant) as the recipient of service. 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. Hence, there is no question of any liability to pay Service Tax on the lease of mines and right to use of natural resources under reverse charge mechanism. The said findings in the impugned order are therefore unsustainable in the eye of law. The demand of Service Tax as sustained in the impugned order is not sustainable, for which reason the same is set aside - appeal allowed.
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