2018 (3) TMI 927 - AT - Service Tax

Classification of services - transportation of coal in contractor s tipping trucks from Bina to Kakri Wharfwall (MGR-Anpara), including manual breaking of coal to (-) 200mm size and loading of coal into contractor s tipping trucks and MGR wagons both with the help of contractor s payloaders -whether classified under Mining of Mineral, Oil or Gas Services or otherwise? Held that - Central Board of Excise Customs C.B.E.C. Circular F. No. 232/2/2006-CX.4 dated 12/11/2007 has clarified that handling and transportation of coal/mineral from pithead to a specified location within the mine/factory or for transportation outside the mine are post-mining activities and could be chargeable to Service Tax under the relevant taxable services, i.e., Cargo Handling Service and Goods Transport by Road . The demand under Mining of Mineral, Oil or Gas Services raised through the said SCN is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Classification of services for taxation under the Finance Act, 1994
- Interpretation of Circular F. No. 232/2/2006-CX.4 dated 12/11/2007 by the Central Board of Excise & Customs
- Liability of Service Tax on transportation activities related to coal

Analysis:
The case involved an appeal against an Order-in-Original passed by the Commissioner of Customs, Central Excise & Service Tax, Allahabad, regarding the classification of services provided by the appellants for the transportation of coal. The Revenue contended that the services fell under Mining of Mineral, Oil or Gas Services, as per Section 65(105) of the Finance Act, 1994. The appellants were issued a Show Cause Notice for non-registration under Service Tax and demanded to pay a substantial amount. The Original Authority confirmed the demand and imposed a penalty, leading to the appeal before the Tribunal.

The appellant's counsel referred to Circular F. No. 232/2/2006-CX.4 dated 12/11/2007 by the Central Board of Excise & Customs, specifically highlighting Para 5 which clarified that transportation activities involving coal/mineral could be chargeable to Service Tax under "Cargo Handling Service" and "Goods Transport by Road." The counsel argued that based on this clarification, the transportation activities undertaken by the appellants did not qualify as "Mining of Mineral, Oil or Gas Services."

Upon considering the arguments and examining the facts, the Tribunal concurred with the counsel's interpretation of the circular. The Tribunal noted that the activities of handling and transporting coal/mineral from pithead to specified locations were post-mining activities, falling under taxable services like "Cargo Handling Service" and "Goods Transport by Road." Consequently, the demand raised under "Mining of Mineral, Oil or Gas Services" was deemed unsustainable. Therefore, the impugned Order-in-Original was set aside, and the appeal was allowed in favor of the appellant, granting them consequential benefits as per the law.

In conclusion, the Tribunal's decision was based on the interpretation of the circular provided by the Central Board of Excise & Customs, which clarified the classification of transportation activities related to coal/mineral for taxation purposes under the relevant taxable services, ultimately leading to the appellant's success in the appeal.