Page 81 - GSTL_30th April 2020_Vol 35_Part 5

2020 ] RAJASTHAN STATE MINES & MINERALS LTD. v. COMMR. OF C. EX. & S.T., JAIPUR 567
Mines and Minerals (Development and Regulation) Act, which defines in Section
3C as under :-
“3C. The mining lease means a lease granted for purpose of undertaking
mining operations, and includes sub-lease granted for such purposes;
As per the definition contained in [Section] 2(d) “mining operation” means
any operation undertaken for the purpose of winning any mineral;
As per Section 27 of the Act the mining lease shall be subjected to various
conditions and sub-section (d) defines as under :
“(d) the lessee shall also pay, for the ‘surface area’ used by him for
the purposes of mining operations, ‘surface rent’ and water rate at
such rate, not exceeding the land revenue, water and cesses assess-
able on the land, as may be specified by the State Government”.
From the definition, it is clear that the surface right, which Revenue is contem-
plating as service, emerges out from the activity of mining operation, as inci-
dental activity. The main activity remains the mining activity, which is nothing
but benefit arising out of the land. Therefore, the same cannot be held to be the
service per se. It is also on record that initially appellant has only acquired the
land for purpose of making it available to the JV company, for the setting up of
the power plant to meet acute shortage thereof in the remote area of State of Ra-
jasthan, in the Barmer District. The entire amount of Rs. 989.92 crore spent on the
acquisition of land was deposited by M/s. RWPL, in an escrow account with the
bank. The State Government also appointed LAO and the Collector, Barmer, has
acquired the land from the landholder, and also from Government. The cost of
acquisition of land was paid to the owner of the land from the said escrow ac-
count by cheque. The landholder has, therefore, sold the land, much before the
year, 2012, which is period involved in the impugned show cause notice. The sale
was complete in the year of acquisition itself and there is no dispute on this fact.
In the circumstances, if due to change of policy of Government of India and State
Government, the transfer of land acquired was denied mutation to the JV com-
pany, by the appellant, will not retrospectively convert the sale into services of
renting of immovable property.
18. The argument of Learned Authorised Representative that the rele-
vant date is the entry of the transaction, in the books of account of JV company, is
not correct as the transaction has already been completed and the land has been
transferred to the State Government/JV company, much before 13-12-2012. The
record produced before us is amply clear on that issue. Learned Authorised Rep-
resentative has misunderstood that the land has not been transferred to the State
Government, but only mutated in favour of the JV company, is incorrect and also
improper appreciation of land records. The sale of the land was completed when
the LAO had made the payment to the cultivator. In that situation, there is no
question of treating the activities undertaken by the appellant by way of acquisi-
tion of land from the landholder, for the project, to be treated as service rendered
respectively, so as to charge service tax. This will be entirely contrary to the pro-
visions of the Finance Act. The provisions of Mines and Minerals Act, clearly
state that the element of surface right is not the main activity in the mining oper-
ation, but it is only incidental to that. In such a situation, the incidental activity
cannot be treated as a main activity, which is mining and benefit arising out of
law, to be an independent service under the category of renting of immovable
property service. Even if it is presumed that surface right is activity which could
be construed as renting of immovable property, the entire sale consideration
GST LAW TIMES  30th April 2020  81