Bombay High Court
M/S. Chaitanya Construction, ... vs Union Of India Thr. Secy., Ministry Of ... on 4 September, 2024
Author: M.S. Jawalkar
Bench: Avinash G. Gharote, Mukulika Shrikant Jawalkar
1 56.WP.3770-2022.odt
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
NAGPUR BENCH AT NAGPUR
WRIT PETITION NO. 3770 OF 2022
( M/s. Chaitanya Construction, Thr. Its Proprietor Mr. Yeshwant
Marotrao Shinde
Vs.
Union of India, Thr. Secretary & Anr. )
Office Notes, Office Memoranda Court's or Judge's orders
of Coram, Appearances, Court's
orders or directions and
Registrar's orders
Mr. J.K. Mittal, Advocate for the Petitioner.
Mr. S.N. Bhattad, Advocate for the Respondent No.2.
CORAM: AVINASH G. GHAROTE AND
SMT. M.S. JAWALKAR, JJ.
DATED : 4th SEPTEMBER, 2024
Heard.
2. The petition questions the imposition of service
tax under the Finance Act, 1994 on the royalty which is being
charged to the Petitioner on various counts. In the instant
case, the tender for construction of road was granted and
service tax is being charged on Murum and Gitti, the
ingredients used for the construction of the road.
3. Mr. Mittal, learned Counsel appearing for the
Petitioner, by relying upon Bharat Sanchar Nigam Ltd., & Anr.
Vs. Union of India & Ors., (2006) 3 SCC 1 para 82 and 83
points out that it lays down the genesis for imposition of
service tax. He also contends, that royalty is not a tax, apart
2 56.WP.3770-2022.odt
from which the imposition of service tax would be beyond the
legislative competence of the Union for the reason that grant
of minor mineral rights is a State subject under List II of the
Seventh Schedule of the Constitution. He submits, that the
issue in no longer res integra but is covered by the answer
given by the Constitution Bench of the Hon'ble Apex Court in
Mineral Area Development Authority & Anr. Vs. Steel
Authority of India & Anr., 2024 SCC OnLine SC 1796 para
198, 204 and 342 (b).
4. The Petition also challenges the Circular dated
13.04.2016 (page 42), on the ground that it is beyond the
competence of the authority to have issued the same by
including the expression "any natural resource" and with
respect to coal extracted from coal mine or royalty payable on
extracted coal in view of the fact, that Section 66 (E)(j) of the
Finance Act, 1994, which defines what is declared services by
virtue of clause (j) is restricted to assignment by the
Government of the right to use the radio-frequency spectrum
and subsequent transfers, and therefore, does not confer
power upon the authority to enlarge the same by inserting the
aforesaid expression so as to make them amenable to levy a
service tax.
5. He further submits, that power to issue a circular,
which in the present matter would be under Section 83 of the
Finance Act read with Section 37 (B) of the Central Excise Act
would not empower the authorities to travel beyond what has
been defined as declared services under Section 66(E) of the
Finance Act, 1994 so as to include various other services. He
3 56.WP.3770-2022.odt
therefore submits, that the Circular dated 13.04.2016
(page 42) so far as it relates to Entry 9 and 10 (page 46), is
legally incompetent being without any lawful authority.
6. He also relies upon the judgment in Mahanagar
Telephone Nigam Limited Vs. Union of India & Ors., 2023
SCC Online Del 1967 para 43, 51, 52 and 53, which holds the
levy of service tax on declared services to be only prospective
post 2016 and not earlier and was only related to spectrum.
7. List the matter on 19.09.2024.
(SMT. M.S. JAWALKAR, J.) (AVINASH G. GHAROTE, J.)
SD. Bhimte
Signed by: Mr.S.D.Bhimte
Designation: PA To Honourable Judge
Date: 05/09/2024 18:05:18
