2023 (12) TMI 1215 - AT - Service Tax

Levy of service tax - Business Auxiliary Service - services of 'Sizing of coal' to customers - HELD THAT - The issue is no longer res integra, as the Tribunal Kolkata Bench has decided the issue in favour of the Appellant in the case of COMMR. OF CENTRAL EXCISE S. TAX, BOLPUR VERSUS M/S INTEGRATED COAL MINING LTD. 2021 (1) TMI 179 - CESTAT KOLKATA where it was held that By discharging the tax liability on the job work charges as well as by discharge of VAT liability on brought out items used for fabrication at site, the scope for considering the activity as manufacture is eclipsed entirely. The Appellant is not liable to service tax under the category of 'Business Auxiliary Service' and hence the demands confirmed in the impugned order is not sustainable - the demands of duty along with interest and penalty confirmed in the impugned order is set aside - appeal allowed.

Summary

Issues involved: Applicability of service tax on 'Sizing of coal' provided by the Appellant under the category of 'Business Auxiliary Service'.

The judgment addressed the issue of whether the Appellant, a coal mining company, was liable to pay service tax on the 'Sizing of coal' provided to customers under the category of 'Business Auxiliary Service'. The audit raised objections regarding non-payment of service tax, leading to show cause notices and subsequent confirmation of demands by the Commissioner. The Appellant contended that previous tribunal decisions favored them, citing cases such as M/s Integrated Coal Mining Ltd. and M/s. Northern Coalfields Ltd. The Tribunal examined these precedents and held that 'Sizing of coal' is part of the manufacturing process, making it outside the scope of service tax under the relevant provisions. The Tribunal also considered the payment of central excise duty by the Appellant on the coal manufactured, further supporting the non-applicability of service tax. The judgment highlighted the principle of mutually exclusive levies under the Constitution, emphasizing that if an activity amounts to 'manufacture', it cannot be considered a service for taxation purposes. Based on these findings, the Tribunal set aside the demands of duty, interest, and penalty confirmed in the impugned order, ruling in favor of the Appellant.

The judgment referenced various tribunal decisions and legal principles to establish that the 'Sizing of coal' activity undertaken by the Appellant does not fall under the purview of 'Business Auxiliary Service' for service tax liability. The Tribunal emphasized that the Appellant's activities were integral to the manufacturing process of coal, which had been subject to central excise duty payments. Citing the Supreme Court's decision in Bharat Sanchar Nigam Ltd. Vs. UOI, the Tribunal reiterated that activities classified as 'manufacture' cannot be considered as services for taxation purposes. The judgment further highlighted previous tribunal rulings in similar cases, including M/s. Northern Coalfields Ltd. and Mahanadi Coal Fields Ltd., where the issue of service tax on activities related to coal processing was addressed, leading to the dismissal of service tax demands. By aligning with these precedents and legal interpretations, the Tribunal concluded that the Appellant was not liable to pay service tax on the 'Sizing of coal' activity, ultimately allowing the appeal filed by the Appellant.