Western Coalfields Limited vs. Commissioner Of CGST And Central Excise

Held

The Court held that the writ petitions were not maintainable due to the availability of an alternate and efficacious remedy of appeal under Section 107 of the GST Act. The Court noted that the petitioners had approached the High Court directly, bypassing the statutory appellate mechanism. While the Court did not delve into the merits of whether the levy under MPGASTVA, 2005 was a tax or a fee, it acknowledged the arguments presented by both sides. The Court observed that the respondent authorities had interpreted the levy as a service provided to the petitioners, making them liable for service tax under RCM, and that this interpretation was not necessarily contrary to the judgment in M/s Neogy & Sons. The Court also mentioned that the effect of a Circular dated 13.04.2016 was liable to be considered by the Appellate Authority. The operative direction was to dismiss the writ petitions with liberty to file an appeal before the Appellate Authority within 60 days from the date of the order.

Facts

The petitioners, South Eastern Coalfields Ltd. and Western Coalfields Ltd., filed multiple writ petitions challenging Orders-in-Original issued by the Commissioner of CGST and Central Excise. These orders demanded service tax on payments made by the petitioners to the Madhya Pradesh State Government under the Madhya Pradesh Gramin Avsanrachna Tatha Sadak Vikash Adhiniyam, 2005 (MPGASTVA, 2005). The petitioners contended that these payments were in the nature of a 'tax' on land, not a 'fee' for services, and thus not subject to service tax. The respondent authorities argued that the payments constituted consideration for services provided by the State Government for rural and mining area development, making them liable for service tax under the Reverse Charge Mechanism (RCM). The impugned orders were passed for various periods, with a significant demand of Rs. 6,96,50,455/- for the period April 2016 to June 2017.

Key Issues

1. Whether the payments made by the petitioners to the State of Madhya Pradesh under the MPGASTVA, 2005 are in the nature of a 'tax' or a 'fee', and consequently, whether service tax is leviable thereon under the Reverse Charge Mechanism (RCM)? (Question of law) Petitioner's Arguments: - The levy under MPGASTVA, 2005 is a 'tax' on land, not a 'fee' for services, as held by a Coordinate Bench of this Court in M/s Neogy & Sons Vs. The State of Madhya Pradesh and Another. Therefore, service tax cannot be levied on an amount that is itself a tax. - The judgment in M/s Neogy & Sons had examined the constitutional validity and nature of the levy, concluding it was a tax on land under List II, Entry No.49 of the VII Schedule read with Article 246 of the Constitution of India. Respondent's Arguments: - The payments made under MPGASTVA, 2005 are in the nature of a 'fee' as they are collected for specific benefits and development of rural and mining areas, from which the petitioners, as mining holders, would be beneficiaries. This constitutes a 'service' provided by the Government. - The judgment in M/s Neogy & Sons did not specifically discuss the leviability of service tax on this levy, and the nature of the levy as a 'fee' for service is to be decided by the GST authorities. - Reliance was placed on the Apex Court judgment in State of Rajasthan Vs. Sajjan Lal to distinguish between 'Tax' and 'Fee'.