Mahesh Sharma Vs Union of India

In this case, petitioner Mahesh Sharma challenged an SCN dated October 20, 2021, issued by the revenue department demanding payment of service tax amounting to ₹36,000, which included Swachh Bharat Cess and Krishi Kalyan Cess. The petitioner asserted that he should not be liable for service tax on royalty payments because he considered royalty to be a form of tax, arguing that imposing a service tax on it constitutes taxation of a tax, which is against the principles laid out in the Finance Act, 1994. The respondents referenced a recent Supreme Court ruling in the case of Mineral Area Development Authority v. Steel Authority of India, which clarified that royalty is not classified as a tax but rather as a contractual consideration paid by a mining lessee to a lessor for the right to extract minerals. The Court underscored that payments made to the government cannot be deemed taxes solely based on their collection methods, such as treating them as arrears. As a result, the Chhattisgarh High Court reflected on this judgment and upheld the position that royalty payments remain subject to service tax as per the existing laws. It dismissed the writ petition, inviting the petitioner to present his case during the scheduled hearing before the concerned authorities. The court stated that the petitioner should raise all grievances at that forum, thereby maintaining adherence to legal procedures and the recent Supreme Court precedent. The notice for a personal hearing dated February 23, 2024, was noted to have lost its efficacy as the date had already passed, but the petitioner was directed to appear before authorities on August 28, 2024, for further proceedings.