TaxTMI 
TaxTMI 
2025 (6) TMI 2049
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....ment with CESC Ltd., Kolkata, to mine coal from the said mines and to sell the same to CESC Ltd (CESC") for use in its power projects on terms and conditions specified in the agreement. 2.2 Similar agreement was subsequently entered into by the appellant with Crescent Power Ltd. ("CPL"), a wholly owned subsidiary of CESC on March 30, 2010, for sale of certain inferior quality coal, commonly known as "carbonaceous shale" or "shaly coal" (hereinafter referred to as "carbonaceous shale') from the said coal mine to CPL, on terms and conditions specified in the said agreement dated 30.03.2010. 2.3 The coal that comes directly from mines, after blasting, known as the run-of-mine coal ("ROM"), are of irregular sizes, including large fragments. In terms of the above-stated agreements, the appellant has to supply coal of specifications and quality, depending upon the intended use thereof, as specified. Since the ROM coal does not conform to the size and specification required to be delivered to the buyers and cannot be sold and transported as such, the said ROM coal has therefore to be prepared. Such preparation includes segregation of the coal from the stones, whereupon they are ....
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....,32,44,804/- & Rs. 26,02,179/- and on account of demand in terms of Section 6(3)(i) amounting to Rs. 7,34,60,689/-, total demand amounting to Rs. 267,93,07,672/- & penalty of Rs. 161,50,05,669/-. 2.9 Against the said order, the appellant is before us. 3. The ld.Counsel for the appellant submits as under : (i) There was duplication of demand in respect of this component having also been confirmed under the category "Mining services" in the first bucket of SCNs. That the Ld. Commissioner has dropped the service tax demand under second bucket of SCNs as the self-same issue stood decided by this Hon'ble Tribunal vide Final Order dated 05.01.2021 upholding the Order-in-Original dated 19.12.2013 for the earlier period i.e. 2007-08 to 2011-12 which inter alia held that (i) Sizing of coal is an incidental and ancillary process to make coal marketable and thus complete "manufacture" of coal and therefore, activity of raising of coal, including crushing thereof, carried out by the Appellant in the Sarshatali coal mine amounted to "manufacture" of excisable goods; (ii) the Appellant is duly registered under the central excise provisions with the jurisdictional Central Excise authorit....
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....cket of SCN is different from this issue since it pertained to post-extraction activities (alleged to be "Business Auxiliary service") vis-à-vis activity of extraction of coal (alleged to be "Mining service") in the present issue. Hence, dropping of 2nd bucket of SCN does not have any effect on the present allegation (although while quantifying demand under this bucket, even sizing charges were considered). The activity conducted by the Appellant falls under "Mining Service" and is leviable to service tax even if Central Excise duty has been paid on the same activity. No ruling has been presented by the Appellant which holds that after Mining services were notified as Taxable services, the activities of mining would not be liable to Service Tax if appropriate Central Excise duty has been paid on the minerals, oil or gas so mined or extracted, or if the process of extraction or mining of minerals, oil or gas is construed as amounting to manufacture. Such argument would render the "Mining services" notified by the Act of Legislature as redundant and inoperable On this basis, the Ld. Commissioner rejected the applicability of various decisions relied upon by the Appell....
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....t on common inputs used for providing both taxable as well as exempted activities (i.e. sale of solar power) without maintaining separate records. Not a single document/ register/record has been submitted by the Appellant evidencing maintenance of separate accounts in accordance with Rule 6(2) of the CCR. Mining Service (a) The Appellant was formed to develop and operate the Sarshatali Coal Block for the captive supply of coal to CESC Ltd and its associate companies (b) The Appellant has been a manufacture/producer of coal from the said Coal Mine, throughout the relevant period i.e. April 2008 to June 2017. The mining lease in respect of the said Coal Block was held by the Appellant from the government of West Bengal in its own name upto March 2015 and thereafter by CESC pursuant to an auction by the government of India, consequent to the Hon'ble Supreme Court ruling in Manohar Lal Sharma vs. The Principal Secretary & Ors. [WP (CRL) No. 120 of 2012]. Therefore, the Appellant continued to operate and raise coal from the said coal block even after April 2015, albeit as a contractor. (c) Since the activity of raising coal amounted to manufacture under Cha....
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....be permitted to take a contrary stand in subsequent cases. (c) VAT and service tax are mutually exclusive and cannot be simultaneously levied on self-same activity. (d) The Appellant had paid VAT on the sale of sized coal to CESC/CPL upto March 2015 when it held the mining lease in its own name, which is evident from the Final Order dated 5 January 2021 of this Tribunal. It is a settled principle that levy of VAT and service tax are mutually exclusive levies and therefore, since VAT has already been levied on the entire sale value, there can be no levy of service tax on the same. The same has not been dealt with in the impugned OIO. Reliance is placed on: * Imagic Creative Pvt. Ltd. v. Commissioner of Commercial Taxes [2008 (9) S.T.R. 337 (S.C.)] * Bharat Sanchar Nigam Ltd. (BSNL) v. Union of India [2006 (2) S.T.R. 161 (S.C.)] * C.C.E. &S.T., Bolpur v. M/s Integrated Coal Mining Ltd. [ 2021 (1) TMI 179] * C.C.E. &S.T. v. Mahanadi Coalfields Ltd. [2017 (8) TMI 1625] (e) The Excise duty and service tax are mutually exclusive levies and could not be demanded simultaneously on self-same activity. (f) The Appellant ....
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..../s 2(f) of CEA and is covered by the Negative list u/s 66D(f) of the Finance Act, 1944. (i) The activity of raising of coal amounts to manufacture as per Section 2(f) of the CEA and the Appellant, as a manufacturer, had been discharging excise duty thereon which is not in dispute. Any process/activity amounting to manufacture is specifically covered in the Negative list under Section 66D(f) of the Finance Act, 1994 i.e. "services by way of carrying out any process amounting to manufacture or production of goods excluding alcoholic liquor for human consumption" and hence are outside the purview of the Act. The same has not been dealt with in the OIO. (j) Demand pertaining to the period from 01/04/2008 to 31/03/2012 is barred by limitation. (k) All relevant facts were known to the Revenue authorities at or prior to August 2012 itself, on the basis whereof the earlier show cause notice dated 21.08.2012, which culminated into Order dated 19.12.2013, was issued in the Appellant's own case. It is a settled principle that when on the self-same set of facts and materials a show cause notice has been issued earlier invoking extended period of limitation, there can....
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....been discharging excise duty thereon albeit in the capacity of a contractor which is not in dispute. Any process/activity amounting to manufacture is specifically covered in the negative list under Section 66D(f) of the Finance Act, 1994. Therefore, outside the ambit of service tax. (ii) The Appellant was paying excise duty on the activity of raising of coal including sizing thereof. It is settled that the levy of excise duty and service tax are mutually exclusive and manufacturer need not necessarily be owner of coal. Reliance is placed on M/s Assam Air Products (P) Ltd Vs. CCE & ST [Para 6,6.2 - 2024 (3) TMI 72]. (m) Decisions relied upon by the Ld. Commissioner are not applicable to the facts of the present case. (n) Decisions relied upon by the Ld. Commissioner have no application to the facts of the present case as those were rendered in different factual context. The assessee therein was not a manufacturer of excisable goods and was not discharging VAT and Excise duty (introduced on coal w.e.f. March 2011) on the self-same activity as is involved in the present case. The same can be demonstrated by the following: Sl. No. Decisions relied upon by the....
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....etation had been vehemently denied and contested by the Appellant in their reply to Show cause notices on inter aliathe following grounds: (i) It is incomprehensible as to on what basis or reasoning coking coal falling under 27011990 and steam coal falling under 27011920 have been considered in the SCN as non-excisable goods. It has been completely mis-appreciated that coal comprises of two broad categories viz., hard coal and low rank coal, which, in turn, contain various sub categories. (ii) The SCN has completely lost sight of the fact that in the event the coal does not have the specified volatile matter limit and/or calorific value, it can classified under other sub-headings(iii) The Appellant was involved in the manufacture of bituminous coal classifiable under Chapter heading 2701 of the CETA and was paying excise duty thereon, which also stands confirmed by the adjudication orders passed by the central excise authorities and assessments carried out under the central excise law during the relevant period.The Ld. Commissioner has rightly not paid heed to such twisted interpretation as alleged in the SCN, but on the contrary has asserted that payment of central excise duty doe....
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....id of any material particulars. The Ld. Commissioner has failed to consider the Chartered Accountant certificates evidencing maintenance of separate accounts. The impugned OIO has erred in observing that no documents evidencing maintenance of separate accounts have been furnished by the Appellant. The Appellant has obtained Chartered Accountant certificates for all the relevant periods who have examined and certified that the Appellant maintains separate accounts detailing the inputs used for taxable goods/services, and those for exempted goods/services, i.e. service of providing solar power in Gujarat and that the Appellant has not claimed CENVAT credit in respect of the transactions relating to solar power business. Further, the same was also submitted before the Ld. Commissioner at the time of adjudication. However, the said factum is conspicuously missing in the impugned OIO and the said Order has been passed without considering the same. Further, it is settled that the certificate of an expert could not have been discarded without any specific and cogent evidence. Reliance is placed on the ruling of this Hon'ble Tribunal in M/s Harinagar Sugar Mills Limited [Para 7 - Final Ord....
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....e to pay service tax on "Sponsorship Services" as alleged or not ? (c) Whether the appellant has violated the provisions of Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for not having paid service tax on sale of solar power, which is exempted services and have availed cenvat credit on common inputs without maintaining separate records ? (d) Whether the demand for the period 1st April, 2008 to 31st March, 2012, is barred by limitation or not ? As the show-cause notice for the said period has been issued to the appellant on 24.04.2014 by invoking extended period of limitation ; (e) Whether in the facts and circumstances of the case, the penalty can be imposed on the appellant or not ? Issue (a) Whether the appellant is liable to pay service tax under "Mining Services" for the period 2008-2009 to June, 2017 or not ? 7. The facts which are admitted are that the appellant was engaged in the business of mining and sale of coal classifying under Chapter Heading 27011200 of the Central Excise Tariff Act. The coal comes directly from mines after blasting known as the run-of-mine (ROM) coal, are of irregular sizes, including large fragments. The app....
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....not be sold and transported as such, the said ROM coal has therefore to be prepared. Such preparation includes segregation of the coal from the stones, whereupon they are crushed/sized as per the desired requirement of the purchasers concerned in the mine area itself, through deployment of workers and using pay loaders and dozers. According to ICML the manufacturing job is only then completed and the coal becomes ready for sale and, hence, sizing of coal is an integral part of coal manufacturing or production, (e) Central excise duty was paid by ICML on the assessable value of coal determined by including the crushing and sizing charges, with effect from 24.03.2011, prior to which coal was subjected to zero excise duty (f) In addition, since inception, on the sale price of the coal including the said sizing charges, Value Added Tax ("VAT") and Central Sales Tax have been deposited as per the relevant statutes of the State and Central Governments respectively, by ICML (g) On 23.08 2012 a show cause notice was issued by the Commissioner requiring ICML to show cause as to why a sum of it under the Proviso to Section 73(1) of the Act, along with interest ther....
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.... as sized coal as per the specification in the Agreement is at all material point of time on ICML's account as owner of the said goods and not for and on behalf of CESC or anybody else. 7.1 Similarly in the case of sale of carbonaceous shale (inferior quality of coal) by ICML to CPL under the Agreement dated March 30, 2010, it is seen that the sale and purchase of carbonaceous shale takes place on delivery of the goods at the designated place within the power plant premises of CPL, when title/ownership and risk of loss passes from ICML to CPL Until then ICML continues to be responsible for transportation and delivery of the goods to the said designated place The contracted price in this case also includes sizing charges. 7.2 Section 65(19)(v) of the Finance Act includes, as "Business Auxiliary Service", production or processing of goods "for and on behalf of client". The requirement for application of this clause is that the goods in question has to belong to the client of the appellant assessee, on which production or processing which does not amount to manufacture of goods within the meaning of Section 2(f) of the Central Excise Act is carried out by the app....
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....ML 8.3 Further, in case of the period from March 24, 2011 to April 24, 2015 proceedings by issuance of show cause notices were initiated by the jurisdictional Commissioner/Principal Commissioner of Central Excise against ICML alleging undervaluation of the transaction values declared for the said period, of bituminous coal manufactured and cleared from the mine, by non-inclusion of elements, namely, royalty, stowing excise duty, primary education cess. rural employment cess, public works cess, road cess and AMBH fees and thereby short paying "central excise duty" to the extent contained in the show cause notices The proceedings under the said show cause notices have resulted in adjudication orders, passed by the Commissioner of Central Excise, Kolkata-1 Commissionerate/Principal Commissioner of Central Excise. Kolkata-1, dated 16 12.2014, 14.10.2015 and 27.05.2016 respectively There the stand of the Central Excise Department is that ICML is engaged in the manufacture of bituminous coal classifiable under Chapter Sub-Heading 27011200 of the First Schedule to the Central Excise Tariff Act, 1985, for which it is holder of central excise registration number, and that ICML had ....
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....d the same was shown in the profit and loss account. The Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. UOI reported in 2006 (2) STR 161 (SC) observed that sales tax and service tax cannot be made applicable on the same transaction as the same is includible to each other. 5. In the instant case undisputedly, the appellant has paid the sales tax/vat when it is so crushing charges are not leviable. Regarding the payment of sales tax/vat, the Ld. Counsel for the appellant has shown proof to the Ld. Counsel for the Department. 6. By following the ratio laid down by the Hon'ble Supreme Court, we find no reason to sustain the impugned order." 10.2 This decision has since been followed by the Principal Bench of the Tribunal, in cases involving the same issue (i) Northem Coalfields Ltd. Vs. Commissioner, CGST, CE&C, 2020-TIOL-338-CESTAT-DEL (ii) South Eastern Coalfields Ltd. Vs. CCE&ST, 2018-TIOL-1691-CESTAT-DEL (iii) Northern Coalfields Ltd. Vs. CGST, CC&CE, 2018 (8) TMI 1742-CESTAT-DELHI. 11.3 In this regard reference is also made to the decision of a coordinate bench of the Tribunal in CCE Vs. Spe....
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....tances, no service tax is payable by the appellant under "Mining Service". 7.2 We further take note of the facts that in the case of Sri Rama Vilas Service Limited Vs. Commissioner of Central Excise, Trichy reported in 2019 (25) GSTL 117 (Tri.-Chennai), this Tribunal has held as under : "5. From the above, it is clear that the activity is a manufacturing activity. The said activity cannot be treated under activity of service merely because the excisable goods manufactured are exempted from excise duty. The department has issued the show cause notice on erroneous understanding of both Central Excise law as well as Finance Act, 1994. The impugned order cannot sustain and requires to be set aside which we hereby do. The appeal is allowed with consequential relief, if any." 7.3 Admittedly, in the Appellant's own case as reported in 2021 (1) TMI 179-CESTAT, Kolkata, this Tribunal observed that the activity undertaken by the appellant, amounts to manufacture. In that circumstances, no service tax is payable by the appellant. 7.4 In view of this, we hold that as the activity undertaken by the appellant amounts of manufacture, therefore, no service tax is payable by the a....
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.... expenses are in the nature of sponsorship services or mere donation., therefore, to examine the said aspects, the matter needs to examine at the end of the adjudicating authority. Therefore, to examine the facts that whether the expenses booked under Business Development expenses are only donation or sponsorship services, the adjudicating authority shall examine the same based on the documentary evidences and shall give specific finding that how based on documents shown by the appellant, the said expenses are covered under "sponsorship services" or not ? Issue (c) Whether the appellant has violated the provisions of Rule 6(3)(i) of the Cenvat Credit Rules, 2004 for not having paid service tax on sale of solar power, which is exempted services and have availed cenvat credit on common inputs without maintaining separate records ? 9. The allegation of the Revenue is that the appellant is not maintaining separate accounts of input/input services with regard to activity of extraction of coal and sale of solar power business, which is exempted from payment of excise duty, whether the appellant is liable to pay the amount equal to 6%/8% of the value of sale of solar power under ....
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.... limitation is not sustainable as held by the Hon'ble Apex Court in the case of Nizam Sugar Factory Vs. Collector of Central Excise, A.P. reported in 2006 (197) ELT 465 (S.C.), wherein the Hon'ble Apex Court has observed as under: "9. Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities. We agree with the view taken in the aforesaid judgments and respectfully following the same, hold that there was no suppression of facts on the part of the assessee/appellant." Therefore, we hold that the demand for the period 01.04.2008 to 31.03.2012, is barred by limitation. 10.1 Therefore, the said issue is also answered in favour of the appellant. Issue (e) Whether in the facts and circumstances of the case, the penalty can be imposed on the appellant or not? 11. As we held that no demand is sustainable against the appellant, therefore....
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....0 139,525 Transportation Charges Rs.77.00 176,121 Assessable Value for Excise Duty Rs.778.00 1,779,512 Excise Duly @ 6% on Assessable Value 106,771 Education Cess on Excise Duty @ 2% 2,135 S & HE Cess on Excise Duty @ 1% 1,068 Primary Education Cess @ 5% on Base Price 73,193 Rural Employmet Cess @ 20% on Base Price 292,773 Royalty @ Rs. 2.50 per MT 5,718 Stowing Excise Duty @ Rs.10 per MT 22,873 Public Works Cess @ Rs.0.50 per MT 1,144 Road Cess @ Rs. 0.50 per MT 1,144 AMBH Fees @ Rs.1.00 per MT 2,287 )Clean Energy Cess @ Rs.50.00 per MT 114,350 Taxable Value for VAT 2,402,968 Add : West Bengal VAT @ 5% on Taxable Value for VAT 120,148 Net Invoice Amount 2,523,116 Net Invoice Amount (In Words) : Rupees Twenty Five Lacs Twenty Three Thousand One Hundred Sixteen Only Excise Duty (In Words) : Rupees One Lacs Six Thousand Seven Hundred Seventy One Only Edu. Cess (In Words) : Rupees Two Thousand One Hundred Thirty Five Only S & H E Cess (In Words) : Rupees One Thousand Sixty Eight Only VAT (In Words) : Rupees One Lacs Twenty Thousand One Hundred Forty Eight Only We certify that t....
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....CA) Amount of ITC surrendered Ufs 22(8A) 0.00 (D) Net tax credit carried forward to next period 0.00 (E) Amount of ITC to be adjusted with output tox for this period 0.00 VI .Net Tax Payable / Further unadjusted Net Tax Credit (IV . V(E) 130,775,304.00 VI Add: Penalty payable, if any, under section 46(2) 0.00 VIII: Add: Late fee payable, if any, under section 32(2) 0.00 IX Add: Interest payable(if any): (a) Interest under section 33 9.030,441.65 (b) Interest under section 34 / 34A 0.00 Total EX (a+b) 9,030,441.65 TOTAL AMOUNT PAYABLE [ VI+VI[+VIII+[X ] 139, 805, 745.65 Less: Tax.interest and late fee paid as evident from the challan(s) fumished 101.938.281.00 Less: Tax deducted at source as evident from From 18 furnished 0.00 Total amount of tax, interest; penalty and late fee paid[ XI+X] ] 101,938,281.00 'Amount yet to be paid 37,057.464.65 IIIA IV ( 1+1+111+111A ] Total Output Tax Payable by you IX Amount of demand yet to be paid - - - - Rs. 37,867,464.65 ( in figures ) Runees Three Crore Seventy Eight Lac Sixty Seven Thousand Four Hundred Sixty Four and Sixty Five Paise Only ( in words ) Payment....
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....CHATURANGA JOUTHA SANSKRITIK MANCHA SANSKR IRONGA To BURDWANJAMGRAM/MADANPUR 2006 The Agent, ICML,Sarishatali Project, Dear Sir, Most respectfully we beg to state that as usual we are going to organise oneday annual coference & cultural function of our above organisation on 25th July 2015 commences from 9 A.M. Large no of people of this locality attend this function and have their appreciation towards this event. You are therefore requisted to please take necessary step for extending your financial help as Y O Y or more from past to meet expenditure of the above celebration to some extent. Hope you will kind enough to consider our above prayer and oblige. Joint Secretary ChattaPung faithfűný Manch Secretary Date 13.7.20015 Chaturanga Joutha sanskritik Manch Document 6 890 Authorised by : (Rupees CE/CS Account Description Account Code Sub Code Debit Amount Credit Amount Bio, Der. LAporta 483520 1.00.000,00 Narration Received from / Paid to 239 Receipt details Cheque / DD No. Dated on Asansol-Durgapan Runner Associati. Bank leia Voucher Date Voucher No. Crore 1 2 JUN 2013 lac thousand NTEGR....