2017 (9) TMI 1125 - AT - Service Tax

Tribunal rules in favor of appellant on service tax liability for coal transport within mining area

The Tribunal ruled in favor of the appellant, finding no merit in confirming the service tax liability under mining services for transporting coal within ... Mining services - activity of transporting coal from pit-head to dump yard within the mining area - Held that: - the Hon’ble Supreme Court in CCE & ST, Raipur Vs. Singh Transporters [2017 (7) TMI 494 - SUPREME COURT] categorically held that such services rendered within the mining area cannot be taxed under the category of mining services - demand set aside. Valuation - inclusion of value of diesel, supplied free of cost by the client to the appellant - Held that: - the issue came up for consideration in the appellant own case M/s Karamjeet Singh & Co. Ltd. Versus CCE, Raipur [2013 (12) TMI 434 - CESTAT NEW DELHI], where it was held that Section 67 does not cover the situation where free of cost material are supplied by the recipient of service - the said value cannot be become part of service rendered - demand set aside. Appeal allowed - decided in favor of appellant. Issues:1. Liability of the appellant for service tax under the category of mining services for transporting coal within the mining area.2. Addition of value of diesel in the taxable value for GTA services.Analysis:1. The two appeals under consideration were inter-connected, with the first appeal addressing the appellant's service tax liability for the period 01/03/2008 to 31/03/2012 under two issues. The first issue involved the liability of the appellant to pay service tax for transporting coal within the mining area, while the second issue related to the addition of value of diesel in the taxable value for GTA services. The second appeal focused solely on the addition of value of diesel in the mining service during the same period.2. The appellant's counsel argued that transporting and shifting excavated coal to a dump yard within the mining area should not be taxed under mining services, citing a decision by the Hon'ble Supreme Court. Regarding the inclusion of free diesel in the taxable value, it was contended that Section 67 does not apply to materials not incurred by the appellant. The learned AR reiterated the lower authorities' findings.3. After hearing both sides and examining the records, the Tribunal noted the Supreme Court's decision that services within the mining area cannot be taxed under mining services. The Tribunal referred to the term 'mines' under the Mines Act, 1952, and concluded that the tax liability for transport activities falls under transport of goods by road rather than mining service.4. Following the Supreme Court's precedent, the Tribunal found no merit in confirming the service tax liability under mining services. On the issue of including the value of free diesel in the service provided, it was held that such value cannot be considered part of the service rendered, as per a previous decision in the appellant's case and the interpretation of Section 67.5. Based on the analysis and discussion, the Tribunal deemed the impugned orders legally unsustainable and set them aside, allowing the appeals. The judgment was dictated and pronounced in open court.