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2017 (10) TMI 975 - HC - Service TaxMining lease - levy of service tax - royalty - whether the royalty under the Act of 1957 is a “consideration” or not and further if that is “consideration”, then what would be the effect pertaining to payment of service tax? Held that: - the royalty is nothing but a “consideration” to have mining operations in the leased area on execution of a mining lease. It is a part of agreement arrived between the parties to have lease of a mining area to undertaking mining operations. The royalty being “consideration” certainly places assignment of right to use natural resources deposited in the leased area as a “service” as defined under Section 65-B(44) of the Act of 1994, according to which, any activity carried out by a person for another for consideration is a service - the notification dated 13.4.2016 is not at all in conflict with its enabling Act i.e. the Finance Act, 1994 and the same does not suffer from any illegality. There is no transfer of immovable property too as the lease granted is only to excavate mineral from the leased area and that activity at the most can be physical `transfer of property by its “renting” as prescribed under Section 65(90a) of the Act of 1994, but not the transfer of title in immovable property. Section 65(90a) pertains to transfer of immovable property by renting and that includes leasing of immovable property for use in furtherance of business and commerce. The absence of the word “title” in this provision is quite important and that indicates the entire activity as transfer of possession of the immovable property for its use or consumption by way of renting, letting, leasing, licencing or by other similar arrangements, as the case may be. The exclusion under Section 65-B(44) is for transfer of title in immovable property, which is conspicuously absent in the grant of lease for mining operations. The tile of the mining area admittedly retains with the State even on execution of mining lease to excavate mineral from the leased area. Petition dismissed - decided against petitioner.
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