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of <h1>No Separate Service Tax on Ancillary Coal Activities; Reverse Charge on Transport Service Valid Under GST Rules</h1> <h3>M/s BLA Infra (JV) Versus Commissioner of CGST & Central Excise, Kolkata</h3> The CESTAT Kolkata held that the appellant's main activity is transportation of coal by road, for which the service recipient has paid service tax under ... Levy of service tax - transportation of breaking of coal - reverse charge mechanism - levy of penalty - HELD THAT:- By going through the agreement, the main activity of the appellant is transportation of coal by the Road, on which the appellant has not paid the service tax and the service recipient has paid the service tax under reverse charge mechanism. It is also found that whether the activity of transportation of goods is the main activity for the ancillaries or not? The said issue has been examined by this Tribunal in the case of Laxmi Narayan Transport [2023 (9) TMI 1282 - CESTAT KOLKATA], wherein this Tribunal has observed that 'the Appellant is not liable to pay service tax under the category of 'Cargo handling service' and service tax on the said GTA service has been rightly paid by the recipient M/s. JSL.' It is found that in this case, the appellant is paying service tax on tipper loading and wagon loading, but for transportation and breaking of coal, it is an ancillary activity and the main activity is the transportation of coal by road. In that circumstances, no service tax is payable by the appellant. On transportation of breaking of coal, admittedly, the service recipient has paid the service tax under “Goods Agency Service” by way of reverse charge mechanism. In view of this also, the appellant is not payable the service tax. The impugned order is set aside - no penalty is imposable on the appellant - appeal allowed. ISSUES: Whether the appellant's service of loading, transportation, breaking, and unloading of coal is correctly classifiable under 'Cargo Handling Service' or 'Goods Transport Agency Service' for service tax purposes.Whether service tax liability arises on the transportation and breaking of coal when the service recipient has paid service tax under the reverse charge mechanism.Whether separate charges for sub-activities in a composite contract affect the classification and taxability of the overall service.Whether penalty is imposable on the appellant for non-payment of service tax on transportation and breaking of coal. RULINGS / HOLDINGS: The appellant's main activity is 'transportation of coal by road,' and ancillary activities such as loading, unloading, and breaking of coal do not convert the service into 'Cargo Handling Service.'Service tax on transportation and breaking of coal is not payable by the appellant as the service recipient has discharged the service tax under the reverse charge mechanism for 'Goods Transport Agency Service.'The presence of separate charges for sub-activities in the work order does not change the nature of the composite service; 'separate rates for the various intermediate activities' do not render each sub-activity a distinct taxable service.The demand for service tax under 'Cargo Handling Service' on transportation and breaking of coal is unsustainable, and consequently, no penalty is imposable on the appellant. RATIONALE: The Court applied the statutory definitions under the Finance Act, 1994, specifically Section 65(23) relating to 'Cargo Handling Service' and the negative list entry under Section 66D(p) concerning 'services by way of transportation of goods by road except the services of a goods transportation agency.'The Court relied on precedent from this Tribunal, which held that ancillary activities incidental to transportation do not alter the classification of the service as transportation and that the service falls under the negative list, hence outside the ambit of service tax.The Court emphasized that the 'essence of the contract' must be ascertained rather than treating each sub-activity separately for taxability, citing prior Tribunal decisions.No doctrinal shift or dissent was noted; the decision reaffirmed established principles regarding composite service classification and reverse charge mechanism applicability.
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