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TMI Blog2023 (3) TMI 1544X X X X Extracts X X X X X X X X Extracts X X X X ..... of coal, which is in question. The charges are quid pro quo to all above four processes. We do not see any reason to not to include the value of rejects in the taxable value. More so, for the reason that except for MAHAGENCO in all other contracts the value of this reject has been included, by appellant itself, in the taxable value despite the fact that all other clients also allowed appellant to retain the reject to be sold and for income to be retained by appellant. Also for the reason that value of service in contracts with WBPDCL DPL is Rs.281.10 per M.T. including value of reject @ Rs.28 per M.T. whereas for MAHAGENCO the value of service in contract is Rs.68/- per MT for reject. Irrespective, it is the value in contract but it is definitely different in contracts where appellant is same and the purpose and modus operandi is same. In view of entire above discussion, we decide the first point of adjudication against the appellant and in favour of the Revenue. Nature of services provided falls under the business auxiliary services or the mining services - In the present case the period of demand is post May 2007 i.e. from June 2011 to March, 2012 during which the activity in qu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary Services and Transport of goods by Road Service . M/s. BIL/appellant is having washeries situated at Ghugus, Pandha Pouri, Wani, Godegaon all in Maharashtra and Chualiberna Jharsugda situated at Orissa and engaged in the activity of beneficiation of Raw Coal in their washeries on behalf of Maharashtra State Power Generation Co. Ltd, (Formerly Maharashtra State Electricity Board) MAHAGENCO and others. Since Feb 2011 all the above referred washeries have been transferred in the name of M/s Bhatia Coal Washeries Limited (hereinafter referred to as M/s.BCWL for the sake of brevity) and thereafter the entire activity of beneficiation/washing of coal is being performed by BCWL, for MAHAGENCO and others. 2. An Intelligence was gathered by the officers of Directorate General of Central Excise Intelligence, Indore Regional Unit (in short DGCEI, IRU ) which indicated that BIL/BCWL have received various contracts/work orders for beneficiation of Raw Coal in their washeries from MAHAGENCO, M/s West Bengal Power Development Corporation Ltd (WBPDCL), Kolkata, M/s Durgapur Projects Ltd (DPL), Durgapur, M/s Rajiv Gandhi Thermal Power Plant (RGTPP), Hisar and from other private parties. The sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ile opining that the appellants had suppressed/concealed the value of taxable service leading to wilful mis-statement, suppression of facts and contravening the provisions of the said Act, or the Rules made there under with intent to evade recoveries of Service Tax liability of Rs.3,57,55,994/- has invoked the extended period while issuing the said Show Cause Notice. 7. This proposal was confirmed vide Order-in-Original No. 26/PR.COMMR/ST/IND/2016 dated 29.03.2016. Being aggrieved, the appellant is before this Tribunal. 8. We have heard Shri Arvind Singh Chawla, ld. Chartered Accountant for the appellant and Dr. Radhe Tallo, ld. Authorised Representative for Revenue. 9. Ld. Counsel for the appellant has mentioned that the Adjudicating Authority has committed an error while classifying the services in question as business auxiliary service where as the service is rightly classifiable under Mining Services . Error has also been committed while taxing the entire amount received from MAHAGENCO under Business Auxiliary Service (BAS) despite being aware that services as that of Cargo Handling and Goods Transport Agency (GTA) service have also been rendered by the appellants to MAHAGENCO. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cted coal, allowed by MAHAGENCO to be retained by BIL/BCWL and later has paid the Service Tax on the value less rebate extended by MAHAGENCO. It is mentioned that the cost of the said Rebate on reject disposal of raw coal, was obviously an additional consideration to BIL/BCWL, hence, it shall form the part of total taxable value as per the provisions of Finance Act 1994 read with Service Tax (Determination of value) Rules, 2006. 12. Hence the appellant himself had adopted different measures for computing different taxable value for some set of services rendered by them to the different clients. Thus, there is no infirmity in the order under challenge when the said different treatment is observed as a basis for confirming the impugned demand. It is submitted that modus operandi of appellants in the case of MAHAGENCO is apparently with an intent to evade the payment of service tax. Hence the extended period has also rightly been invoked while issuing the Show Cause Notice. With these submissions, the appeal in hand is prayed to be dismissed. 13. Having heard the rival contentions and perusing the entire record, we observe and hold as follows:- Three issues which appears to be adjudic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the cost of coal rejects retained by them, though under the head Business Auxilliary Services . 17. The transaction value of beneficiation processes has to be checked. We draw our support from decision in the case of Carborandum Universal Ltd. v. Commissioner reported in 2006 (11) LCX0315Eq.2007 (211) ELT 0105 (Tri.-Chennai), wherein an order of the Commissioner classifying a product under a heading different form what had been proposed in the SCN was set aside and the appeals filed by the assessee were allowed. 18. Further the civil appeal filed by the department against the said decision of this Bench was dismissed by the Supreme Court vide Commissioner v. Carborandum Universal Ltd. reported in 2008 (223) ELT A94 (S.C.) 19. We observe from the contracts that the entire rejects will be handled and disposed by M/s. Bhatia International Limited at his own cost and they will be required to obtain statutory clearances and maintenance of proper records of rejects. 20. For all the contracts other than MAHAGENCO, service tax was paid after duly taking abatement of GTA service in case of Transportation activity and in the case of Loading of coal, service tax was paid on cargo handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok adjustment, and any amount credited or debited, as the case may be, to any account, whether called Suspense account or by any other name, in the books of account of a person liable to pay service tax, where the transaction of taxable service is with any associated enterprise. On a reading of the above definition, it is clear that both prior and after amendment, the value on which service tax is payable has to satisfy the following ingredients: a) Service tax is payable on the gross amount charged :- the words gross amount refers to the entire contract value between the service provider and the service recipient. The word gross is only meant to indicate that it is the total amount charged without deduction of any expenses. Though merely by use of the word gross the Department does not get any jurisdiction to go beyond the contract value to arrive at the value of taxable services. Further, by the use of the word charged , it is clear that the same refers to the amount billed by the service provider to the service receiver. Therefore, in terms of Section 67, unless an amount is charged by the service provider to the service recipient, it does not enter the equation for determining ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed, however, it is subject to the provisions of sub-sections (1), (2) and (3). 23. The expression 'such' occurring in Section 67 of the Act assumes importance. In other words, valuation of taxable services for charging service tax, the authorities are to find what the gross amount is charged for providing 'such' taxable services. As a fortiori, any other amount which is calculated not for providing such taxable service cannot a part of that valuation as that amount is not calculated for providing such 'taxable service'. 24. Hon ble Supreme Court in the case of Union of India vs. Intercontinental Consultants Pvt. Ltd. (2018 4 SCC 669 (CA) 2013/2014 and connected cases) has held as follows:- 67. Clause (i) of sub-section (1) of Section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider for such service . Reading Section 66 and Section 67 (1) (i) together and harmoniously, it seems clear to us that in the valuation of the taxable service, nothing more and nothing less than the consideration paid as quid as quid pro quo for the service can be brought to charge. Sub section (4) of Section 67 which e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... beneficiation of coal. The arguments of the appellant that reject is nothing but waste is also not appealable to us, because this argument holds good, has it been the case of excise duty, because the value of scrap is not the subject matter of excise duty. But in the present case, it is the value of service tax being charged for beneficiation of coal, which is in question. The charges are quid pro quo to all above four processes. We do not see any reason to not to include the value of rejects in the taxable value. More so, for the reason that except for MAHAGENCO in all other contracts the value of this reject has been included, by appellant itself, in the taxable value despite the fact that all other clients also allowed appellant to retain the reject to be sold and for income to be retained by appellant. Also for the reason that value of service in contracts with WBPDCL DPL is Rs.281.10 per M.T. including value of reject @ Rs.28 per M.T. whereas for MAHAGENCO the value of service in contract is Rs.68/- per MT for reject. Irrespective, it is the value in contract but it is definitely different in contracts where appellant is same and the purpose and modus operandi is same. In vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... coal is the principal object of the mining, quarrying 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 clear that washing of coal is also a part of mining activity. 15. ------------- 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. There are sufficient grounds to hold that the activities carried out by the appellant amounts to mining service. When such a view is taken, the appellant would not at all be liable to Service Tax for a period prior to 1-6-2007. (emphasis supplied) 17. 18. In this connection it will also be pertinent to refer to the decision of the Bombay High Court in Indian National Shipowners Association v. Union of India. - 2009 (14) S.T.R. 289 (Bom.). It was held that introduction of a new entry and inclusion of certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the members of the 1st petitioner cannot be brought to tax under that entry. (emphasis supplied) 19. Recently also the decision of the Tribunal in M/s. Malviya National Institute of Technology v. Commissioner, Service Tax, Jaipur - 2019 (6) TMI 127-CESTAT NEW DELHI = 2019 (28) G.S.T.L. 472 (Tribunal) wherein it was observed that :- 14. ------The definition of CE services as it stood prior to 16 July, 2001 was not amended when a new service namely, STC was inserted on 16 July, 2001. It cannot, therefore, be alleged that STC service had been carved out from CE Services. In fact, the definition of CE services continued to remain the same, till it was amended in 2006. Thus, the Show Cause Notice proceeded on an incorrect premise that even prior to 16 July, 2001, the nature of service provided in STC services was the same as CE Services. 29. In the present case the period of demand is post May 2007 i.e. from June 2011 to March, 2012 during which the activity in question was nothing but the mining services. Thus, the service of beneficiation of coal cannot be taxed under Business Auxiliary Services post 2007. The demand for rendering mining services, since has been raised an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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