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TMI Blog2024 (11) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice charges. The appellant did so. Now, if the appellant subsequently sells this coal rejects either as such or after mixing it with some other coal and sells them for Rs. 150, this amount is the value of coal the rejects sold by the appellant on which the appellant may be required to pay VAT/ sales tax. According to the appellant it had paid appropriate VAT to the State Government. The demand of service tax on the sale price of rejects is beyond the scope of the Finance Act, 1994 because service tax can be levied only on the consideration received for the services and not on a goods sold by the appellant. Service Tax has already been discharged on the entire value of consideration this as is evident from the invoices. In this case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aring for the revenue and perused the records. 3. The appellant is a private limited company engaged in beneficiation of coal which is also known as washing of coal. Coal is used in power generation and the power plants need the coal to be washed before using and the appellant does the washing. In the process, some amount of coal gets rejected which is known as reject coal . Therefore, of the total coal which is given to the appellant, some portion goes in to rejects and the rest is washed and returned to the power generation corporation. Washing removes the ash and dust etc., and increases the calorific value of the coal. The undisputed position is that this process is a service rendered by the appellant to the power generating companies a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant received its first show cause notice dated 30.03.2012 covering the period 2006-11 proposing service tax demand of Rs. 20,44,02,883/- alleging that the appellant had failed to include the amounts received in the form of sale value of coal rejects in the value of consideration for service of beneficiation of coal and thus had not paid service tax on it. It is also alleged that the appellant had wilfully suppressed these facts from the department with an intent to evade payment of tax and had not declared the same in the ST-3 returns. The second show cause notice covering the period 2011-12 was issued on 20.12.2012 while the third show cause notice covering the period 2012-13 was issued on 28.04.2012. The fourth show cause notice cover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ws that the appellant had paid service tax on the entire amount of beneficiation charges which it had received and had not deducted any amount which it had not received in cash in lieu of the coal rejects which it was allowed to retain. Another tax invoice dated 31.03.2012 issued in the name of executive engineer Rajeev Gandhi Thermal Power Plant, Hissar, Haryana, also shows that the service tax was paid on the entire amount of beneficiation charges which the appellant had received either in cash or in kind. The deduction from the service charges towards the reject coals which the appellant had retained is only made in the bill towards the end and the service tax was not affected by it. Learned counsel for the appellant also took us through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant received some of the consideration in cash and some in the form of coal rejects. The value attributed to the coal rejects is also indicated in the agreements. Therefore, there is no dispute about this value. 15. As seen from various invoices the appellant had discharged service tax on the entire amount of service charges paid to it without deducting any amount towards the value of the rejects. 16. The question which arises is what is the basis of the demand in the show cause notice. Paragraph 3.10 and 3.11 of the first SCN dated 30.03.2012 clarifies this position and is reproduced below: 3.10 Whereas it appears that the assessee has paid service tax on the part of the value of services which they have received from their client in the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 150, this amount is the value of coal the rejects sold by the appellant on which the appellant may be required to pay VAT/ sales tax. According to the appellant it had paid appropriate VAT to the State Government. The demand of service tax on the sale price of rejects is beyond the scope of the Finance Act, 1994 because service tax can be levied only on the consideration received for the services and not on a goods sold by the appellant. Service Tax has already been discharged on the entire value of consideration this as is evident from the invoices. 18. We have also gone through the decision of the Bhatia Coal Washeries relied on by the Revenue. In that case, the appellant had paid service tax on the total taxable value of beneficiatio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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