2026-VIL-1383-CESTAT-KOL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Relevant date of assignment of the mining rights, Royalty to the State Government for Mining Lease - Point of Taxability - Extended Period of Limitation - Demand-cum-Show Cause Notice alleging that appellant received taxable service of assignment of right to use natural resources but wilfully failed to discharge Service Tax under reverse charge - Appellant contended that issue was interpretational and contentious at the time, extended period of limitation was not invocable, and the mine allotment being prior to 01.04.2016, no Service Tax was leviable - Whether Service Tax can be demanded under extended period of limitation when the issue relating to taxability of royalty was contentious and interpretational in nature, and no suppression or intent to evade was established - HELD - Extended period of limitation cannot be invoked when the issue was interpretational and highly contentious. No allegation of suppression, fraud, collusion, wilful misstatement or intent to evade can be sustained. Appellant paid royalty to the State Government and duly filed statutory VAT returns disclosing transactions - A bona fide belief that no Service Tax was payable cannot constitute suppression with intent to evade. The taxable event is when service is provided or agreed to be provided. The right to use natural resources was allotted and agreed to be provided prior to 01.04.2016, when such services were covered by the negative list. The formal lease deed executed on 29.08.2016 was merely a continuation of the already concluded arrangement. Service Tax cannot be fastened on allotment made prior to 01.04.2016 even if consideration was paid thereafter - In the present case since the right has crystallized on the date when the mining is assigned to the Appellant, in principle, that date is to be taken as the date of assignment of the mining rights to the Appellant - The demand confirmed in the impugned order is set aside on the ground of limitation and also on merits – The appeal is allowed
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