No service tax applicable on sizing operation activity of coal

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL

The Relevant Text of the Order as follows :

9. It is also not disputed that all along ICML has paid value added tax or Central Sales Tax on the coal and shale sold by it to CESC and CPL respectively.

10. In such circumstances, applying the principle laid down by the Supreme Court in Bharat Sanchar Nigam Ltd. Vs. UOI, 2006 (2) STR 161 (SC), since scheme of taxation under the Constitution of India provides for mutually exclusive levies, if certain activity amounts to “manufacture”, it cannot become or be contended to be service. This issue is no more res integra.

10.1 In the case of Commr. of CE&ST Vs. Mahanadi Coalfields Ltd., Final Order No. 76585/2017 dated 21.08.2017 passed in Appeal No. STA/75816/2014, this Bench of the Tribunal, dealing with the self same issue, has held as follows:

“2. Brief facts of the case are that during the period under consideration, the appellant was engaged in the crushing/sizing of the coal in its own mines. While receiving the consideration from the buyer in addition to the base price, the department is of the view that the crushing/sizing of the coal by the respondents for sale attracts the service tax under the business auxiliary service as per Section 65(19) of the Finance Act, 1994. But by the impugned order, the Commissioner dropped the demand. Being aggrieved, the Department has filed the present appeal.

3. ……………………………………………………………

4. After hearing both the parties it appears that the appellants had paid the sales tax/vat and total amount of sale includes crushing charges as well as other charges e.g. silo loading charges and the same was shown in the profit and loss account. The Hon’ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. UOI reported in 2006 (2) STR 161 (SC) observed that sales tax and service tax cannot be made applicable on the same transaction as the same is includible to each other.

5. In the instant case undisputedly, the appellant has paid the sales tax/vat when it is so crushing charges are not leviable. Regarding the payment of sales tax/vat, the Ld. Counsel for the appellant has shown proof to the Ld. Counsel for the Department.

6. By following the ratio laid down by the Hon’ble Supreme Court, we find no reason to sustain the impugned order.”

10.2 This decision has since been followed by the Principal Bench of the Tribunal, in cases involving the same issue:

(i) Northern Coalfields Ltd. Vs. Commissioner, CGST, CE&C, 2020-TIOL-338-CESTAT-DEL

(ii) South Eastern Coalfields Ltd. Vs. CCE&ST, 2018-TIOL- 1691-CESTAT-DEL

(iii) Northern Coalfields Ltd. Vs. CGST, CC&CE, 2018 (8) TMI 1742 – CESTAT – DELHI.

11.3 In this regard reference is also made to the decision of a coordinate bench of the Tribunal in CCE Vs. Spectron Engineers Pvt. Ltd., 2020 (33) GSTL 223 (T). In para 4 of the order it has been observed as follows:

“4. Having heard both sides, we find ourselves confronted with a dispute in which the jurisdictional central excise authorities seek to levy duties under Central Excise Act, 1944 while respondent claims leviability under Finance Act, 1994. That the respondent had been discharging service tax liability on ‘job work’ and had been paying VAT on the material component is not in doubt. The original authority has placed reliance on the decision of the Tribunal in Osnar Chemical Pvt. Ltd. V. Commissioner of Central Excise, Bangalore-II [2009 (240) ELT 115 (Tri-Bang.)] to hold that discharge of tax liability under one law precludes the invoking of another law merely for garnering revenue that has thereby escaped one of the jurisdictions. 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. In this context of mutually exclusive levies under the scheme of taxation in the Constitution, the activity of the respondent is works contract and hence not leviable to duty under Central Excise Act, 1944.”

(emphasis added)

10.4 Respectfully following the abovestated decisions, which also apply fully to the instant case, we find no infirmity with the impugned order of the Commissioner. The appeal of the Revenue against the same has no merit.

11. The impugned order dated 19.12.2013 of the Commissioner is therefore upheld and the Department‟s appeal is dismissed.

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Tags: Custom, Service Tax, Judgement

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