Facts
M/s Mahanadi Coalfields Ltd., has been engaged in mining of Iron Ore and Manganese at Katamati Iron Ore and granted lease of mines by the Govt. of Odisha. For the said mining project, the Appellant sought forest clearance so that forest land falling under the said project can be utilized for non forest purposes. Accordingly, such clearance was granted by Ministry of Environment and Forest and Climate Change on payment of charges, known as ‘Net Present Value (NPV) in the Compensatory Afforestation Fund(CAMPA FUND). The Investigating officers contended that such payment of NPV to Govt. of India, appeared to be in lieu of ‘Declared Service’ of toleration of the act of use of forest land for non-forest purposes rendered by Government and attracts service tax under reverse charge mechanism in terms of Notification No.30/2012-Service Tax dated 20.06.2012, which the Appellant failed to discharge.
Decision
The two member bench of Ashok Jindal Member (Judicial) and K. Anpazhakan Member (Technical) observed that the Revenue has considered the clearance granted by Ministry of Environment, Forest and Climate Change for usage of the forest land falling under the said project for non forest purposes, as a ‘Declared Service’ and the charges of NPV paid by the Appellant as ‘Consideration’ for the said service and demanded service tax under Reverse Charge.
The bench further observed that the payment of NPV to the CAMPA Fund has been made by operation of law and the Appellant has no choice whatsoever. Thus, the amounts paid cannot be called as ‘consideration’ by any stretch of imagination, for the alleged ‘service’.
“Furthermore, the Government is duty bound by the Constitutional Mandate (Article 48 of the Constitution of India) and by the Parliament (The CAMPA Act, 2016, Forest Conservation Act 1980) to collect the charges for granting diversion of forest land for non-forest purposes like mining to preserve, conserve and regeneration of lost ecological balance,” the tribunal said.
The bench held that the clearance granted by Ministry of Environment, Forest and Climate Change for usage of the forest land falling under the said project for non forest purposes, cannot be considered as a ‘Declared Service’ as defined under Section 66E(e) of the Finance Act, 1944 and the charges of NPV paid by the Appellant cannot be considered as ‘Consideration’ for the said service.
Case title: M/s Mahanadi Coalfields Limited (Orient Area) v/s Commissioner of CGST & Central Excise, Rourkela
Citation: Service Tax Appeal No. 75432 of 2022