CASE STUDY

BRIEF FACTS OF THE CASE:

M/s Ramdev Stone & Granite, Udaipur (hereinafter referred to as Appellant) was served with a notice in the year 2019 for non-payment of Service Tax on Royalty by the Udaipur Jurisdiction for the period from 01.04.2016 to 30.06.2017. The said show cause notice was issued by the Additional Commissioner, Central goods and service tax Commissionerate, Udaipur. In respect of the said Show Cause Notice, the appellant had opted for the SVLDRS Scheme for the conclusion of the proceedings. Subsequently, another notice for the same issue and for the same period and for the same lease deed was served to the appellant by the Assistant Commissioner, CGST Pali in the year 2021. The allegations of the impugned notice were confirmed in the Order in Original. Being aggrieved by the order, appellant preferred an appeal before the Commissioner (Appeals) in which he mentioned the fact of the opting for the SVLDRS scheme in the notice issued earlier. The appellate authority passed a generalised order by clubbing appeals filed by various other appellants regarding the identical matter on taxability of royalty. However, while passing the order, the appellate authority failed to consider the submissions of the appellant in the instant case. The appellate authority was required to take a look at the facts of the instant case individually and was duty bound to pass order considering the submissions made by the appellant in its appeal memorandum. Hence, aggrieved appellant preferred an appeal before the Hon’ble Tribunal against the order-in-appeal.
CA Pradeep Jain, authorised representative of the appellant appeared for the personal hearing to present the submissions and relevant explanations on behalf of the appellant.

Submissions by Appellant:

CA. Pradeep Jainsubmitted the following contentions: -
Duplicative proceedings not sustainable:

It is submitted that two separate Show Cause Notices have been issued by the Udaipur and Pali offices in respect of the same Lease No. and for the identical period, i.e. April 2016 to June 2017 pertaining to the same subject matter. Thus, initiation of parallel proceedings and issuance of a second SCN on the very same issue for the same period and on the same lease deed is impermissible, renders the subsequent SCN void ab initio and non-est, and is liable to be set aside. For this reliance was placed upon the judgement in the case of Twenty First Century Steels (P) Ltd. v. Commissioner of C.Ex. Chandigarh [2010 (255) E.L.T. 524 (P&H)]

Issuance of second SCN not justified when the proceedings already stands concluded on account of SVLDRS scheme adopted by the Appellant:

Appellant submitted that declaration under Sabka Vishwas (Legacy Dispute Resolution), 2019 (SVLDRS) was accepted by the department and the determined liability was duly discharged vide SVLDRS-3. Thereafter, SVLDRS-4 was issued in which full and final settlement of tax dues for the first show cause notice was certified. Hence, raising demand by way of issuance of a subsequent SCN on the identical subject matter and the period is wholly unsustainable and thus liable to be set aside.

Order passed without considering the reply filed by the Appellant is non-speaking:

It was argued that the facts of the instant case, were in detail made part of the appeal memorandum of the appeal filed before the Commissioner (Appeals). However, the appellate authority failed to consider the submissions made by the appellant. Reliance was placed upon the judgement given by Madras High Court in the case of Engineering Aids v. State Tax Officer (Circle) in which it was held that demand order passed without considering the reply of the appellant is non-sustainable.

Extended period of limitation cannot be invoked in case of Second show cause notice:

Appellant submitted that, extended period of limitation cannot be invoked twice on the ground of suppression specifically in those cases where the facts already are within the knowledge of the department. In the instant case, as the department was already aware of the facts as the show cause notice has already been issued earlier. Hence, suppressing ground of wilful suppression on the same subject matter is wholly unsustainable.

Service tax not chargeable as the Lease Deed was prior to 01.04.2016:

It was argued that, as the lease deed was executed in 2011 which is much prior to 2016. Thus, the lease deed itself establishes that tax event occurred prior to 01.04.2016. The services provided by the government regarding the right to use of mineral area/natural resources were specifically covered under the Negative List as provided under Section 66D(a) of the Finance Act 1994. Hence, the point of taxation/taxable event have occured prior to 01.04.2016. It is pertinent to mention that, the department itself mentioned the lease deed in the show cause notice. Hence, the right to use the mineral area/natural resources was granted pursuant to such lease deed date. For this reliance was placed upon the judgement given in the case of Principal Commissioner, CGST & Central Excise, Bhopal v. M/s S R Traders and M/s R.D. Clay Mines Private Limited v. Commissioner (Appeals), Central Excise & CGST .

Hence, based on above contention the impugned order should be set aside.

Judgement & Findings:

The adjudicating authority observed and decided the matter in following manner:
The submissions made by the appellant was accepted and it was held that the demand raised by the show cause notice issued subsequently was set aside and demand of penalty was also dropped.

AUTHOR’s COMMENT:

The present judgment reinforces the settled principle that parallel proceedings for the same period and on an identical issue cannot be initiated by the Department. Permitting such duplicative proceedings would create a vicious circle of repeated notices, demands and adjudications, leaving taxpayers exposed to endless litigation on the same issue. Therefore, any demand arising from such unsustainable proceedings deserves to be set aside, thereby safeguarding genuine taxpayers against arbitrary and repetitive departmental action.
Further, in matters concerning service tax on royalty paid for mining rights, where the lease deed was executed before 01.04.2016, the taxable event is required to be examined in light of the applicable legal framework and the point of taxation. Where the relevant point of taxation falls before 01.04.2016, the subsequent introduction of taxability cannot, by itself, justify a retrospective levy. This aspect has also been discussed in detail in one of our earlier case studies of M/S Ganesh Lime. However, the present judgment is distinguishable in its primary focus, as it deals with the impermissibility of duplicative proceedings initiated by the Department rather than merely determining the taxability of royalty.

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PJ case study/2026-27/14

CASE STUDY

BRIEF FACTS OF THE CASE:

Submissions by Appellant:

Judgement & Findings:

AUTHOR’s COMMENT:

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