The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that no service tax leviable on charges for granting use of forest land for non-forest for the purposes Like mining.
M/s Mahanadi Coalfields Ltd., (Orient Area), the appellant 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 a 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.
The issue to be decided in the present appeal is whether the Appellant has rendered any Service as defined in clause (44) of Section 65B of the Finance Act, 1944. As per clause (44) of Section 65B, ‘Service’ means any activity carried out by a person for another for consideration, and includes a ‘Declared Service’.
Clause (22) of Section 65B of the Finance Act defines ‘Declared Service’ as “an activity carried out by a person for another for consideration and specified in Section 66E of the Finance Act”. The following activity has been specified in Section 66E(e) of the Finance Act, as ‘Declared Service’.
Quashing the service tax demand, a Two-Member Bench comprising Ashok Jindal, Judicial Member and K Anpazhakan, Technical Member held that “We hold 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.”
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