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TMI Blog2008 (5) TMI 248X X X X Extracts X X X X X X X X Extracts X X X X ..... ashing of raw coal with the help of water. This is called beneficiation. They are also undertaking certain Auxiliary Services such as co-ordination with SCCL, bill preparation, bill payment, issue/permits. All the above activities are done on behalf of the clients such as M/s. Karnataka Power Corporation, Bangalore and M/s. Orient Cement. Revenue proceeded against the appellants on the ground that they had not paid service tax for the above activities in the category of "Business Auxiliary Services". The learned Adjudicating Authority gave a finding that the appellant rendered service in the category of "Business Auxiliary Service" which is liable to Service Tax. He confirmed a payment of Rs. 1,80,84,957/- (Rs.1,77,30,349/- Service Tax + Rs. 3,54,608/- Education Cess). The period involved is from 10-9-2004 to 31-8-2005. The longer period in terms of proviso to Section 73(i) of the Finance Act has been invoked. Interest under Section 75 has also been demanded. Penalty equal to the tax confirmed has been imposed under Section 78 of the Finance Act. Further, under Section 76 penalty of Rs. 100/- per day has been imposed. The appellants are highly aggrieved over the impugned order. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l incidental/auxiliary services such as permits, clearances, liaison with Railway authorities organize railway siding at the loading points. (c) To ensure that the wagons are not overloaded and supervise the transportation by keeping themselves apprised and be thoroughly conversant with the Rules and regulations of Railway/coal companies and any other related agencies. (d) To ensure dispatch of coal and to comply with the documentation formalities and prescribed procedure of Railway. (e) To under cleaning, washing, screening and sizing of coal. (f) To arrange for delivery of beneficiated coal as per the monthly/quarterly schedules. (g) To utilize the services of Coal Transport Agency (CTA) for making. (h) To dispose the rejects. 8. The allegation is that the above services are covered by clauses (v) and (vii) of Section 65(19). The above activities have nothing to do with any taxable services. At best, washing/cleaning of coal will amount to processing which will be taxable only from 16-6-2005, the other activities connected with collection and transportation of coal cannot be treated as any Business Auxiliary Services. Moreover, when the contract is composite for s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mainly receiving raw coal on behalf of dirrerent consumers having size ranging from 1 to plus 250 mm and discharged into Hopper. The raw coal is fed on 1000 mm primary Belt conveyor through 400 TPH Vibraing Feeder. The Primary belt is discharging coal into a Hopper fitted with a grizzly. The plus 200 mm coal is sent to Rotary Breaker where the coal is crushed down to 50 mm and mixed with the crushed product. The shales and stones will be recovered from the discharge end of Rotary Breaker and collected in a Dry Reject Bunker. Plus 50 mm size coal is passed through the Double Roll Crusher to reduce the size to minus 50 mm. The crusher output as well as the minus 50 mm coal from the Rotary Breaker are screened in a Double Deck 50/25 mm size vibrating screen. The 50-13 mm coal is washed in a barrel washer and collected separately in an Overhead Bunker. The minus 13 mm coal is collected in an Overhead Bunker and rejects from Barrel washer is collected in a wet reject Bunker. Beneficiating involves cleaning, washing screening and sizing of coal. In the whole process, although the raw coal is washed with plain waters it continues to remain coal and it is regarded as coal only. 13. Ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any other operation carried on therein, and includes a plant for the production of coke or for the washing of coal. When the ash content of the coal is very high, the quality is poor. The Mines and Minerals (Development and Regulation) Act, 1957 in the Second Schedule gives the different gradations of coal. Among the gradation, washery grade is clearly indicated. From all this, it is dear that washing of coal is also a part of mining activity. In the functions and responsibilities of the Department of Coal of the Government of India, there is mention about development and operation of coal washeries other than those for which department of steel is responsible. Coal washeries may be set up by coal consumer or by an operator for obtaining coal of desired quality to meet the demand and supply of washed coal. Possible allocation of the washery may be near pithead in general. The Coal (Nationalization) Act, 1973 was amended w.e.f. 9-6-1993 to allow coal mining for captive consumption for generation of power, washing of coal obtained from a mine and other end uses to be notified by Government from time to time, in addition to the existing provision for captive coal mining for product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tivity. The service provided by to any other person is relating mining or case has been brought under the ambit of service tax w.e.f. 1-6-2007. As washing of coal is recognized as a part of mining activity in the enactment relating to mining, in our view the washing or beneficiation of coal would be liable to service tax only w.e.f. 1-6-2007. In the case under appeal the period is prior to 1-6-2007 and therefore our conclusion is that for the relevant period the activity carried out by the appellant would not be liable to service tax as mining service. 16. Once it is established that the activity of the appellant is mining,, it cannot be taxed under the Business Auxiliary Service for the period prior to 1-6-2007. Even when we examine the definition of business auxiliary service, it is seen that production which does not amount to manufacture comes under business auxiliary service. The beneficiation of coal does not amount to production of coal because beneficiation is a process, which enhances the quality of the coal. However, in the definition of business auxiliary service, an amendment was carried out to include process also w.e.f. 16-6-2005. The appellant has made an alterna ..... X X X X Extracts X X X X X X X X Extracts X X X X
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