2023 (10) TMI 115 - AT - Service Tax

Chargeability to Service Tax - business support service - collection and disposal of fly ash generated at the thermal power stations - Section 73(1) of the Finance Act, 1994 - HELD THAT - This Bench in METTUR THERMAL POWER STATION VERSUS CCE (ST) , SALEM 2013 (10) TMI 436 - CESTAT CHENNAI has considered the rival contentions, notifications referred to during the course of arguments and the issue as to chargeability to Service Tax on the collection and disposal of fly ash generated at the thermal power stations, has also considered the Notification issued by Ministry of Environment Forests, Government of India, policy decision of the Government of Tamil Nadu, in the context of the scope of levy under business support service, to hold that Activity of collection and removal of Fly ash as per rate of the order of Government of Tamil Nadu would not constitute infrastructural support service under the definition of Support Service of Business or Commerce . In terms of the above ruling of this very Bench and as judicial discipline demands us to follow the order of a co-ordinate Bench, it is held that the proposed tax liability on the assessee was rightly deleted by the Commissioner and hence, the order of the Commissioner does not call for any interference. The appeal filed by Revenue is dismissed.

Summary

Issues involved:
The issues involved in the judgment are whether the activity of disposal of fly ash by a thermal power station constitutes a taxable service under business support services, and whether service tax is applicable on the collection and removal of fly ash.

Issue 1: Taxability of disposal of fly ash under business support services:
The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Tirunelveli, regarding the taxation of the disposal of fly ash by M/s. Tuticorin Thermal Power Station (TTPS). The Revenue issued Show Cause Notices proposing to demand service tax on business support service for the period from May 2006 to December 2011. The assessee contended that the disposal of fly ash was not a taxable service as it was done in compliance with government regulations and was not for profit. The Commissioner considered the explanation offered by the assessee and held that the disposal of fly ash by TTPS did not constitute a taxable service under business support services. The Revenue appealed this decision.

Issue 2: Applicability of service tax on collection and removal of fly ash:
The Revenue argued that the activity of providing infrastructural support services, including the collection and removal of fly ash, should be subject to service tax. They contended that the charges collected by TTPS indicated the provision of services like infrastructure maintenance and technical expertise. However, the Tribunal noted that a similar issue had been considered in a previous case involving Mettur Thermal Power Station, where it was held that the consideration received for the supply of fly ash was for the sale of the product and not for any service provided. The Tribunal upheld the ruling of the previous case and concluded that the tax liability on the assessee was rightly deleted by the Commissioner. Therefore, the Tribunal dismissed the appeal filed by the Revenue.

Separate Judgement:
No separate judgment was delivered by the judges in this case.