Service tax on Royalty paid on mining

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RATILAL LIMBANI (Querist)
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23 October 2021 Dear Experts

kindly provide me reply against notice of service tax payment in account of Royalty paid on Mining.

Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)
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11 July 2024 Certainly! Here’s a sample reply you can use to respond to a notice demanding service tax payment on royalty paid for mining activities:

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[Your Name]
[Your Address]
[City, State, Zip Code]
[Date]

To,
The Deputy Commissioner (Service Tax)
[Name of Tax Department]
[Address of Tax Department]
[City, State, Zip Code]

Subject: Reply to Notice on Service Tax Payment for Royalty Paid on Mining

Dear Sir/Madam,

I am writing in response to the notice dated [Date of Notice] regarding the demand for service tax payment on royalty paid for mining activities. I would like to present the following points for your consideration:

1. **Nature of Royalty Payment**: The payment made towards royalty for mining activities is not subject to service tax under the provisions of the Finance Act, [Year]. Royalty payments are specifically excluded from the purview of taxable services as per [mention specific provision or notification if available].

2. **Legal Basis for Exemption**: According to [mention relevant legal provisions or notifications], royalty payments made in relation to mining activities are exempt from service tax. This exemption is based on the principle that royalty payments do not constitute consideration for any service provided but rather represent compensation for the right to extract minerals from the land.

3. **Precedents and Case Laws**: Numerous judicial precedents support the exemption of royalty payments from service tax liability. Courts have consistently held that royalty payments are not consideration for any service and hence not liable to service tax.

4. **Documentation**: Enclosed with this reply are copies of relevant documents including:
- Copies of agreements showing the nature of royalty payments and its legal basis.
- Copies of relevant provisions of the Finance Act and notifications supporting exemption.
- Copies of any judicial precedents or case laws that affirm the non-applicability of service tax on royalty payments for mining.

5. **Request for Withdrawal**: In light of the above arguments and supporting documents, I kindly request the withdrawal of the demand for service tax payment on royalty paid for mining activities.

Should you require any further information or clarification, please do not hesitate to contact me at [Your Phone Number] or [Your Email Address]. I would be more than willing to provide any additional details necessary to resolve this matter promptly.

Thank you for your attention to this matter.

Yours sincerely,

[Your Name]
[Your Signature (if sending a physical copy)]

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Ensure that you customize the details and tailor the response to fit your specific circumstances and the contents of the notice received. Include any additional supporting documents or legal references that strengthen your case against the service tax demand on royalty payments for mining.

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