2018 (8) TMI 173 - AT - Service Tax

Classification of services - Services of loading and transportation/movement of coal in the mining area - demand for the period upto 30/06/2012 when the service tax was levied on the basis of specified notified activities - demand for the period w.e.f. 01/07/2012, when the levy of service tax has been changed to a negative list basis. Demand for the period upto 30/06/2012 - activity of transportation of coal from the coal face to the railway siding - whether the services would be classifiable under the category of mining service or under transportation of goods by road service? - Held that - The Apex court in the case of Singh Transporters 2017 (7) TMI 494 - SUPREME COURT has decided in identical circumstances that the activity cannot be charged under mining service but more appropriately classifiable under transportation of goods by road service - the demand of service tax for the period upto 31/06/2012 set aside. Demand for the period on or after 01/07/2012 - bundled services or not? - the case of Revenue is that the loading of coal on tippers on the coal face as well as transportation thereof upto the railway siding is to be considered as a bundled activity, whose essential character is mining - Held that - Even though the activities of transportation of coal has taken place within the mining area, the Apex court in the Singh Transporters case has taken the view that such activity will be classifiable only under GTA and not under mining. In these circumstances, taking a different view for the period w.e.f. 01/07/2012 is not warranted - Even for the period w.e.f. 01/07/2012, the activity of transportation of coal from the coal face to the railway siding will continue to enjoy the benefit available to goods transport agency and cannot be bundled into a single service under Section 66F alongwith lifting of coal at the coal face into the activity of mining. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Classification of services provided by the appellants as either mining services or Goods Transport Agency (GTA) services.
2. Applicability of service tax liability on transportation of coal for the period 2012-2013.
3. Interpretation of Section 66F of the Finance Act in relation to bundled services.

Analysis:

Issue 1: Classification of services
The appellants were engaged in loading and transportation of coal within a mining area under separate agreements with a company. The dispute arose regarding the classification of these services as either mining services or GTA services. The Department argued that both loading and transportation activities constituted a single service of mining. However, the appellants contended that transportation should be classified under GTA services, with service tax liability under reverse charge mechanism. The Tribunal analyzed the nature of the agreements, machinery used, and the independence of the activities to conclude that the services were distinct. The Tribunal held that the transportation of coal should be classified under GTA services.

Issue 2: Service tax liability for transportation
For the period up to 30/06/2012, the Adjudicating Authority had ordered the appellants to pay service tax under the category of mining service for transportation activities. However, following the decision of the Apex court and Tribunal's own ruling, the Tribunal set aside the service tax demand for this period. For the period from 01/07/2012, the Revenue argued that the activities were bundled and essential character was mining. The appellants and the Tribunal disagreed, stating that the transportation activity should be treated separately under GTA services. The Tribunal held that even for this period, the transportation of coal should not be bundled with mining activities and should enjoy the benefits available to GTA services.

Issue 3: Interpretation of Section 66F
The Tribunal discussed the application of Section 66F of the Finance Act, emphasizing that even after changes in taxation post-01/07/2012, the benefits granted to GTA services continued. Despite activities taking place within the mining area, the Tribunal relied on the Apex court's decision to classify transportation under GTA services. The Tribunal concluded that a different view for the period after 01/07/2012 was unwarranted and set aside the service tax demand, allowing both appeals.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the transportation of coal should be classified under GTA services, even for the period after 01/07/2012. The judgment emphasized the independence of the activities and the continued application of GTA service benefits post the change in taxation laws.