2024 (3) TMI 1106 - AT - Service Tax

Mining company's transportation services fall under Goods Transport Agency, not Mining Services classification

M/s. Ambey Mining Private Limited Versus Commissioner of Service Tax-II

M/s. Ambey Mining Private Limited Versus Commissioner of Service Tax-II - TMI Issues Involved:1. Demand of service tax under the category of 'Mining Services'.2. Demand of service tax under 'Business Auxiliary Services'.3. Disallowance of CENVAT Credit on Tippers.4. Denial of CENVAT Credit on M.S. Channel and M.S. Angle.5. Disallowance of CENVAT Credit on invoices in the names of third parties.Summary:1. Demand of Service Tax under 'Mining Services':The Tribunal observed that the activities of the Appellant, such as transportation of coal within and outside the mining area, and shifting and feeding coal into power plant hoppers, cannot be classified under 'Mining Services' as defined u/s 65(105)(zzzy) of the Finance Act, 1994. These activities are more appropriately classifiable under 'Goods Transport Agency Services', where the liability to pay service tax lies on the service receiver under the reverse charge mechanism. The Tribunal relied on the Supreme Court's decision in CCE Vs. Singh Transporters and the Tribunal's decision in MaaKalika Transport Pvt. Ltd. Accordingly, the demand of Rs. 18,76,33,250/- along with interest and penalty under 'Mining Services' was set aside.2. Demand of Service Tax under 'Business Auxiliary Services':The Appellant had received Rs. 75,60,332/- as discounts from vendors, which was credited under 'Handling Charges' in their books. The Department considered these receipts as taxable under 'Business Auxiliary Services'. However, the Tribunal found that these were merely discounts and not for providing any taxable services. Therefore, the demand of Rs. 8,53,102/- under 'Business Auxiliary Services' was set aside.3. Disallowance of CENVAT Credit on Tippers:The Appellant purchased Tippers in 2008 and used them for providing 'Cargo Handling Services' as per a work order dated 01-02-2010. The Tribunal held that Tippers are eligible as 'Capital Goods' only for certain services like 'Cargo Handling Services'. Since the Tippers were not used for providing such services at the time of purchase in 2008, the credit was rightly denied. The demand of Rs. 37,13,615/- along with interest and penalty was upheld.4. Denial of CENVAT Credit on M.S. Channel and M.S. Angle:The Appellant claimed CENVAT Credit of Rs. 8,64,278/- for M.S. Channel and M.S. Angle used for repairing Tippers/Dumpers. The Tribunal noted that the adjudicating authority did not verify whether these items qualified as capital goods and whether they were actually used for repairs. The matter was remanded back to the adjudicating authority for fresh examination.5. Disallowance of CENVAT Credit on Invoices in the Names of Third Parties:The Appellant had reversed the entire CENVAT Credit of Rs. 6,14,095/- along with interest. The Tribunal appropriated this amount as it was already reversed by the Appellant.Order:1. The demand of service tax of Rs. 18,76,33,250/- under 'Mining Services' is set aside.2. The demand of Rs. 8,53,102/- under 'Business Auxiliary Services' is set aside.3. The disallowance of CENVAT Credit of Rs. 37,13,615/- on Tippers is upheld along with interest and penalty.4. The demand of recovery of irregular credit of Rs. 8,64,278/- is set aside and remanded for fresh examination.5. The reversed CENVAT Credit of Rs. 6,14,095/- is appropriated.6. The appeal is disposed of on these terms.