2018 (9) TMI 1511 - AT - Service Tax

Classification of services - activities carried out by them in transporting/shifting the excavated coal from pit-head to dump yard - whether classified under the head mining services or under the head GTA Services? - Held that - Hon ble Supreme Court in C.C.E. & S.T., Raipur Vs. Singh Transporters 2017 (7) TMI 494 - SUPREME COURT has categorically held that such services rendered within the mining area cannot be taxed under the category of mining services. The activity of the appellant for transporting coal from the pit area to the place of stock yard as the activity of GTA. It is also on record that the said tax liability has already been discharged by Western Coal Fields under Reverse Charge Mechanism - question of double taxation also do not arise. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Liability of the appellant for service tax under the category of mining service for transporting coal within the mining area.

Analysis:
The present appeal before the Appellate Tribunal CESTAT NEW DELHI was directed against Order No. 1398 dated 08.04.2015, which arose from Show Cause Notice No. 7524 dated 14.08.2013. The Department alleged that the appellant was providing mining services but not discharging their service tax liability on gross receipts, misclassifying their activity under GTA services. The impugned demand was raised and confirmed, leading to the filing of the appeal. The appellant contended that the work orders received were for mining activities and transportation of coal within the mining area. The appellant argued that the demand was wrongly raised and confirmed, seeking to set aside the order and allow the appeal. The Department justified the order, stating that the activity within the mining area could not be segregated, although conceding that the issue was a covered one.

Upon hearing both parties and examining the appeal records, the Tribunal addressed the issue of the appellant's liability for service tax under the mining service category for transporting coal within the mining area. Citing the decision of the Hon'ble Supreme Court in C.C.E. & S.T., Raipur Vs. Singh Transporters, the Tribunal held that services rendered within the mining area cannot be taxed under the category of mining services. Referring to the term 'mines' under Section 2 (j) of the Mines Act, 1952, and the decision in V.N. Transport Vs. C.C.E., Raipur, the Tribunal concluded that the tax liability for transportation activities falls under transport of goods by road rather than mining service. Relying on the Supreme Court's decision in Singh Transporters, the Tribunal found no merit in confirming the appellant's service tax liability for transporting coal within the mine area as mining services. It was noted that the tax liability had already been discharged by Western Coal Fields under Reverse Charge Mechanism, eliminating the possibility of double taxation. Consequently, the Tribunal set aside the challenged order and allowed the appeal.

This judgment clarifies the distinction between mining services and transportation activities within a mining area for tax liability purposes, providing a clear legal precedent for similar cases in the future.