2024 (4) TMI 678 - AT - Service Tax

Tribunal Confirms Coal Washing Is Not Taxable as 'Business Auxiliary Services' Before 1.6.2007; Revenue Appeal Dismissed.

Principal Commissioner, CGST South Commissionerate, New Delhi Versus M/s. Aryan Coal Benefications Pvt. Ltd.

The Revenue's appeal contesting the classification of coal washing as taxable 'Business Auxiliary Services' under Section 65(105)(zzb) of the Finance Act, ... Classification of service - Business Auxiliary Services or not - process of washing of coal - period 16.06.2005 to 31.03.2007 - HELD THAT:- The decision of the Tribunal in ARYAN ENERGY (P) LTD. VERSUS COMMR. OF CUS. & C. EX., HYDERABAD-I [2008 (5) TMI 248 - CESTAT BANGALORE], M/S SPECTRUM COAL AND POWER LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR [2012 (9) TMI 24 - CESTAT, NEW DELHI] and M/S. ARYAN COAL BENEFICATIONS PVT. LTD. VERSUS COMMISSIONER OF SERVICE TAX NEW DELHI [2012 (9) TMI 205 - CESTAT, NEW DELHI] have consistently held that the activity of beneficiation of coal by the assessee is part of mining activity and, therefore, would be liable to service tax only w.e.f. 1.6.2007 and once it is established that the activity is mining, it cannot be taxed under the “Business Auxiliary Service” for the period prior to 1.6.2007. It is found that it is settled by the judicial pronouncements that the activity of beneficiation/washing of coal is a taxable service in relation to mining of minerals only w.e.f. 1.6.2007 and, therefore, the Commissioner rightly decided that no demand can be made by the Department for the period prior to 01.06.2007 under the category of “Business Auxiliary Service”. There are no reasons to differ from the settled law and which is squarely applicable in the facts of the present case - The impugned order is accordingly affirmed - appeal filed by the Revenue stands dismissed. Issues involved: The issue involves the taxation of the process of washing coal under the category of 'Business Auxiliary Services' u/s 65(105)(zzb) of the Finance Act, 1994 for the period from 16.06.2005 to 31.03.2007.Comprehensive details of the judgment for each issue involved:1. The Revenue appealed against the Order-in-Original dated 05.07.2018, contesting the decision favoring the assessee on five issues. 2. The crux of the appeal focused on whether the process of washing coal falls under taxable 'Business Auxiliary Services' u/s 65(105)(zzb) of the Finance Act, 1994 during the period from 16.06.2005 to 31.03.2007. 3. The respondent was involved in washing raw coal on behalf of clients. 4. The activity of coal washing became taxable under Section 65(105)(zzzy) w.e.f. 1.6.2007, pertaining to services provided in relation to mining of minerals, oil, or gas. 5. During the period prior to 1.6.2007, the Revenue sought to tax coal washing under 'Business Auxiliary Service' as per Section 65(19)(v) of the Finance Act, 1994. 6. The respondent's counsel cited previous Tribunal decisions supporting that coal beneficiation is part of mining activity, hence not taxable under 'Business Auxiliary Service' pre-1.6.2007. 7. The Authorized Representative for the Revenue acknowledged the consistent favorable view towards the assessee on this issue. 8. Previous Tribunal decisions affirmed that coal beneficiation is a mining activity and not liable for service tax pre-1.6.2007 under 'Business Auxiliary Service.' 9. The Revenue's appeal against the Tribunal's decision was dismissed due to delay, leaving the legal question open for further consideration. 10. Judicial precedents established that coal washing is taxable under mining services only from 1.6.2007, affirming the Commissioner's decision to not demand service tax pre-1.6.2007 under 'Business Auxiliary Service.' The appeal by the Revenue was consequently dismissed.[Order pronounced on 16th April, 2024]