2012 (9) TMI 205 - AT - Service Tax

Coal beneficiation not taxable under Service Tax pre-2007; loading/unloading part of mining contract. No penalties imposed.

The Tribunal held that coal beneficiation does not fall under Business auxiliary services for Service Tax liability before 1-6-2007. Loading/unloading ... Beneficiation of coal activity - Business auxiliary services - Held that:- As the beneficiation of coal carried out by the appellant is definitely a part of mining activity. 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 and in the case under appeal the period is prior to 1-6-2007 and therefore the conclusion is that for the relevant period the activity carried out by the appellant would not be liable to service tax as mining service.- in favour of assessee. Activity of loading /unloading of the coal for bringing the coal into washery fall under the category of cargo handling services - Held that:- As the appellant has entered into a contract with their customers for the purpose of beneficiation of coal, which would also include bringing the raw coal to their washery and supply the washed coal to their customers, thus it cannot be held that the appellant is cargo handling agency providing services to another person. Further, the said loading /unloading is required to be done by the appellant for himself. Such service is not being provided by him to any other person. The said activity is so integrally connected with the activity of beneficiation of coal that the same cannot be segregated and it cannot be held that the same was a different and separate activity falling under the definition of cargo handling services in as much - in favour of assessee. Issues:1. Whether the beneficiation of coal activity is covered under Business auxiliary services for Service Tax liability.2. Whether loading/unloading of coal for the washery constitutes cargo handling services.3. Whether the show cause notice for the specified period is time-barred.Analysis:1. The Tribunal analyzed whether the activity of coal beneficiation falls under Business auxiliary services for Service Tax liability. The Commissioner had confirmed a substantial demand against the appellant for washing coal under Business auxiliary services. However, referencing a previous decision, the Tribunal held that coal beneficiation is part of mining activity and was not liable for Service Tax before 1-6-2007. Thus, for the relevant period, the activity was not subject to Service Tax.2. Regarding the activity of loading/unloading coal for the washery, the Commissioner upheld the demand under cargo handling services. The appellant argued they were not a cargo handling agency as they did not profit from the loading/unloading activities. The Tribunal considered the contractual arrangements and concluded that the loading/unloading was an integral part of the mining contract for coal beneficiation, not a separate cargo handling service. Therefore, the demand under cargo handling services was set aside.3. The issue of limitation was not addressed as the appeal was allowed on merits. Since the demand was deemed unsustainable, the question of imposing penalties did not arise. The Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.