2018 (4) TMI 838 - AT - Service Tax

Business Auxiliary Services - activities of bringing down the sizes of the mined coal into certain specific sizes - sale of Coal on payment of Sales Tax/ VAT - Held that - sales tax and service tax cannot be made applicable on the same transaction as the same is includible to each other - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of activities provided by the appellant as falling under 'Business Auxiliary Service' for taxation.
Applicability of service tax on crushing/sizing of coal by the appellant.
Conflict between sales tax/VAT and service tax on the same transaction.

Analysis:
The appellant, engaged in coal production and sizing activities, faced a dispute regarding the taxation of the services provided. The Department contended that the activities of bringing down mined coal into specific sizes should be categorized under 'Business Auxiliary Service' for tax purposes. This interpretation led to confirmed demands on the appellant after adjudication.

The Tribunal referred to a previous decision in a similar case where it was held that crushing/sizing of coal by the appellant did not attract service tax under 'Business Auxiliary Service'. The appellant had paid sales tax/VAT on the total sale amount, which included various charges like crushing charges and silo loading charges. Citing a Supreme Court judgment, the Tribunal emphasized that sales tax and service tax cannot both apply to the same transaction as they are inclusive of each other.

After considering the arguments from both parties, the Tribunal found no merit in the Department's interpretation. Consequently, the impugned order confirming demands on the appellant was set aside, and the appeal was allowed in favor of the appellant. This decision highlights the importance of clarity and consistency in tax regulations to avoid overlapping tax liabilities on the same transaction.