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2024 (11) TMI 1343 - AT - Service Tax


Issues:
1. Whether the appellant paid service tax on the entire amount of service charges received, including the value of rejects.
2. Whether the demand for service tax on the sale price of coal rejects is valid.

Analysis:
The appellant, a coal beneficiation company, filed appeals against orders confirming service tax demands along with interest and penalties imposed by the Commissioner. The appellant provided coal washing services to power generation companies, retaining rejected coal. The dispute arose regarding whether the appellant paid service tax on the entire service charges, including the value of rejects. The appellant argued that it paid service tax on the full amount received, either in cash or kind, and not just on the cash portion. The department issued multiple show cause notices alleging non-payment of service tax on the sale value of coal rejects. The Tribunal examined invoices and agreements, concluding that the appellant had indeed paid service tax on the total service charges without deducting any amount for the value of rejects.

The department's demand for service tax on the sale price of coal rejects was deemed unsustainable as service tax is levied on consideration for services, not goods sold. The Tribunal highlighted that the appellant had already paid appropriate VAT on the sale of rejects to the State Government. Referring to a previous case, the Tribunal emphasized that service tax should be paid on the entire amount of service charges without deducting any amount for coal rejects. Since the appellant had paid service tax on the full service charges, the demand for service tax on the sale price of rejects was considered misconceived. Consequently, both appeals were allowed, and the impugned orders were set aside, providing relief to the appellant.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing that service tax should be paid on the total service charges received, excluding any deductions for coal rejects. The demand for service tax on the sale price of rejects was deemed outside the scope of the Finance Act, 1994. The judgment provided significant relief to the appellant by setting aside the impugned orders and granting consequential relief.

 

 

 

 

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