2023 (3) TMI 1430 - AT - Service Tax

Levy of Service Tax - business auxiliary service - sizing of coal - appellant asserts that at the time of sale it recovered basic price of the coal, coal sizing charges, surface transport charges and other levies from the customers and paid the applicable excise duty/sales tax on the said amount - dispute relates to the period 2014-15 - HELD THAT - It does transpire from a perusal of the decision rendered in M/S SOUTH EASTERN COALFIELDS LTD. VERSUS CCE ST, RAIPUR 2018 (4) TMI 838 - CESTAT NEW DELHI that the issue stands covered in favour of the appellant. The Tribunal, after relying upon the decision of the Supreme Court in BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA 2006 (3) TMI 1 - SUPREME COURT , held that both sales tax and service tax cannot be made applicable on the same transaction. In this view of the matter, when the appellant is only cutting the size of the coal to be provided to the customers, it cannot be said that any service has been offered by the appellant to the buyer of coal. The order impugned dated 09.12.2016 therefore, cannot be sustained and set aside - Appeal allowed.

Summary

Issues:
1. Whether sizing charges on coal constitute taxable service under 'business auxiliary service'?
2. Applicability of service tax on sizing charges recovered by the appellant.
3. Validity of the order confirming the demand of service tax on coal sizing.

Analysis:
1. The appellant contested the demand of service tax on sizing of coal under 'business auxiliary service' imposed by the Commissioner. The appellant argued that it had already recovered various charges, including sizing charges, from customers and paid applicable excise duty/sales tax on the total amount at the time of sale.

2. The department issued a show cause notice claiming that by recovering sizing charges, the appellant provided a taxable service falling under 'business auxiliary service'. The order confirming the demand was challenged in the appeal. The appellant's counsel cited a previous Tribunal decision in a similar case, emphasizing that both sales tax and service tax cannot be levied on the same transaction, as established by the Supreme Court in Bharat Sanchar Nigam Ltd vs. Union of India [2006 (2) STR-161 (S.C.)].

3. The Tribunal, after reviewing the earlier decision in favor of the appellant, concluded that since the appellant was merely cutting the size of coal for customers without offering any additional service, the demand for service tax on sizing charges was unjustified. Citing the principle that both sales tax and service tax cannot be imposed on the same transaction, the Tribunal set aside the order dated 09.12.2016 confirming the demand of service tax on coal sizing, thereby allowing the appeal in favor of the appellant.