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JSW Steel gets service tax relief on ore purchases

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal has held that a mine lease holder is liable to pay service tax on minerals auctioned and not the buyer, granting relief to JSW Steel in a case involving iron ore lump purchases. JSW Steel had bought 16,000 tonnes of iron ore lumps from Sesa Sterlite in an e-auction conducted by a monitoring committee set up by the SC for the sale of minerals in Karnataka’s Bellary, Chitradurga and Tumkur districts .

The revenue department had claimed that since JSW had received services from the monitoring committee, it was liable to pay service tax under the reverse charge mechanism.

Subsequently, the GST and central excise commissioner also held that JSW Steel, and not Sesa Sterlite, was liable to pay the service tax of ₹5 crore. This prompted the company to approach the appellate tribunal, which delivered its verdict last week.

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