Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2026 Supreme(Online)(CESTAT) 1852

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL NEW DELHI PRINCIPAL BENCH, COURT NO. 3
Ashok Jindal, Judicial Member, K. Anpazhakan, Technical Member
SHREE GANESH LIME – Appellant
Versus
COMMISSIONER OF CENTRAL EXCISE & CGST-JODHPUR – Respondent
SERVICE TAX APPEAL NO. 50510 OF 2024 | ST/50797/2024 | ST/50821/2024 | ST/50865/2024 | ST/51911/2024 | ST/51912/2024

Advocates:
For the Appellants/Petitioners: Pradeep Jain, Tanuj Agrawal
For the Respondents: Rajeev Kapoor, Shashank Yadav

Liability for service tax on royalty payments under the reverse charge mechanism depends on the execution date of the lease agreement; if executed prior to 01.04.2016, the tax may not be payable.

Headnote:The matter pertains to the demand of service tax for the period 01.04.2016 to 30 June, 2016, on royalty payments made to the State Government under the reverse charge mechanism as per Section 66D of the Finance Act, 1994. The appellants contended that their lease agreements were executed prior to 01.04.2016, and therefore, no service tax is payable. The court observed that the date of the lease agreement is essential to determine the tax liability. The primary issue is whether the appellants are liable to pay service tax on royalty payments under the reverse charge mechanism if the lease agreements were executed before 01.04.2016. The court reasoned that since the lease agreements were not available on record, it would be in the interest of justice to verify these documents through the adjudicating authority. In view of this, all the appeals are disposed of by way of remand.

Table of Content
1. service tax demand on royalty payments under reverse charge mechanism. (Para 1 , 2)
2. impact of lease agreement execution date on tax liability. (Para 3 , 4)
3. remand for verification of lease agreement dates by adjudicating authority. (Para 5 , 6 , 7)

ASHOK JINDAL

1. In all these appeals the issue is common and, therefore, all are disposed of by a common order.

2. By way of impugned order demand of service tax has been raised against the appellants for the period 01.04.2016 to 30 June, 2016 on account of payment of royalty to the State Government under reverse charge mechanism in terms of Section 66D of the Finance Act, 1994.

3. The counsel for the appellant submits that they are required to file lease agreement to clarify that lease agreements have been executed prior to 01.04.2016 and they are not liable to pay service tax in terms of the decision of the Tribunal in the case of Madhya Pradesh State Mining vs. Principal Commissioner of CGST & CE reported at 2023 (10) CENTAX 253 (Tri-Del). If lease agreement is executed prior to 01.04.2016, no service tax is payable. Therefore, they need time to file the lease agreement which are to be examined by the adjudicating authority, therefore, prayed that the matter may be remanded to the adjudicating authority.

4. On the other hand, learned authorized representative supported the contention of the appellants.

5. Considering the submission made by both the sides, we find that as date of lease agreement is essential to decide the issue whether the appellants are liable to pay service tax on payment of royalty under reverse charge mechanism in term of Section 66D of the Finance Act, 1994.

6. As lease agreement is not available on record, in view of that it would be in the interest justice to remand the matter back to the adjudicating authority with the direction to the appellants to file lease agreement before the adjudicating authority and thereafter adjudicating authority shall examine the issue on merits and pass an appropriate order in accordance with law.

7. In view of this, all the appeals are disposed of by way of remand.

[Operative part of the order pronounced in open court]

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