2018 (8) TMI 1742 - AT - Service Tax

Classification of Services - the appellant provides the activities of bringing down the sizes of the mined coal into certain specific sizes - whether the said activity would be classified under Business Auxiliary Services or not? - Held that - There is no service involved in the facts of the matter - The appellant offering the cut to size coal to its customer, is like offering his coal in various forms and sizes to its customers hence if cutting the coal to various sizes is a service then we feel it is a service to himself and not to the buyer because buyer is being charged on per tonnage basis as per coals forms and sizes - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of activities as "Business Auxiliary Service" for taxation
Applicability of service tax on activities related to coal production and sizing
Conflict between sales tax and service tax on the same transaction

Analysis:
The judgment deals with the interpretation of activities provided by the appellant in the context of taxation under the category of "Business Auxiliary Service." The appellant, engaged in coal production and sizing, faced demands from the Department based on the provision of activities like bringing down coal sizes for customers. The Tribunal examined the nature of the services provided and concluded that there was no service involved in the matter. It was observed that offering coal in various forms and sizes to customers, including cutting coal to specific sizes, was akin to offering coal in different variations to buyers. The Tribunal referenced a previous decision where a similar set of facts led to the appeal being allowed, indicating consistency in the interpretation of such cases.

Regarding the applicability of service tax on activities related to coal production and sizing, the Tribunal considered the case's specifics. The appellant had paid sales tax/VAT, and the total sale amount included various charges, such as crushing and silo loading charges. Citing a Supreme Court case, it was noted that sales tax and service tax cannot be applied to the same transaction as they are inclusive of each other. Based on this reasoning, the Tribunal found no merit in the impugned orders and set them aside, ultimately allowing the appeals in favor of the appellants.

The judgment highlights the importance of distinguishing between different types of taxes and ensuring that they are not applied redundantly to the same transaction. It also emphasizes the need for a clear understanding of the nature of services provided to determine their tax implications accurately. The decision provides clarity on the taxation aspect of activities related to coal production and sizing, offering guidance for similar cases in the future.