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TaxTMI 
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2026 (4) TMI 1004
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....les), 1982 pursuant to the leave granted by this Bench. 2.1. We find that initially, two separate appeals had been filed against the impugned order before this Tribunal. Upon hearing the parties in respect of the other appeal, being Diary No. 750052026, on 04.02.2026, this Tribunal granted leave to the appellant-applicant to amend the said appeal and combine the same with the present appeal bearing No. ST/75003/2026. The amendments sought are purely procedural in nature and do not change the nature or scope of the challenge to the impugned order and are necessary for proper adjudication of the matter. Therefore, in the facts and circumstances of the case and in the interests of justice, we allow the amendments proposed to be incorporated in the subject Appeal No. ST/75003/2026. In these terms, the miscellaneous application filed by the appellant-applicant stands allowed. 3. With the consent of both the sides, we have taken up the present appeal for disposal on its merits. 4. The facts of the case are that the appellant had been engaged, inter alia, in the 'production of coal from the mines of its clients, who are mine owners. Such coal produced had been exclusively sup....
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....s entered into 'coal production agreements' with the appellant for production, further processing of coal and for effecting delivery thereof to the power utilities. The appellant was entitled to service charges on the basis of quantity of coal produced and dispatched and the respective joint venture companies discharged central excise duty liability on the self-same activities of production, processing and dispatch of coal. The said joint venture companies also entered into 'coal purchase agreements' with the respective power utilities in respect of sale of coal produced by the appellant on their behalf. No part of the process of production or any incidental/ancillary process connected therewith was ever carried out by any joint venture company. No service tax or excise duty had been charged or collected by the appellant and there is no dispute as to the said position. 7. Under misconception of facts and/or law the appellant had started paying service tax on the activity of production of coal aforesaid, which service tax had been paid from the appellant's own pocket and had not been collected from the respective joint venture companies. A certain amount of confusion may have res....
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....his behalf, though the jurisdictional Service Tax Division had queried with the appellant as to why there had been drastic fall in payment of service tax on and from July, 2012. The appellant duly responded to the said query and exchanges correspondences from time to time. 8.2. On January 20, 2014 the appellant applied before the Chief Commissioner of Central Excise and Service Tax, Kolkata for refund of Service Tax paid under mistake of law for the period from June, 2007 to June, 2012 under the category of 'mining of mineral etc. services' on the activities of production of coal. Thereafter, a show cause notice was issued for rejection of refund, which the instant appellant contested. The said proceedings give rise to successive orders for rejection of refund. 9. Thereafter, a Show Cause Notice was issued to the appellant on 28.05.2014 [SCN-1] by invoking the proviso to Section 73(1) of the Finance Act, demanding payment of Service Tax of Rs.154,88,28,983/- (including cesses) for the period from 2012-13 and 2013-14 (April, 2013 to December, 2013), along with interest and penalties, on the allegation that the activities undertaken by the appellant were exigible to Service Tax....
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....id order, the ld. adjudicating authority has also imposed a penalty of Rs.154,88,28,983/- under Section 78 of the Finance Act, 1994, a penalty of Rs.19,75,43,757/- under Section 76 of the Finance Act, 1994 and a penalty of Rs.10,000/- under Section 77(2) of the Finance Act, 1994; the proposals for personal penalty on Shri Bikas Mukherjee, Director of the appellant company and Shri Purojit Roy, Executive Director & C.F.O. of the appellant-company, were dropped. 11. The appellant was constrained to file a writ petition bearing WPA/7675/2020 (EMTA Coal Limited & Another vs. UOI & Others) before the Hon'ble Calcutta High Court by challenging, inter alia, the impugned order dated 21.06.2017. The said writ proceeding was heard from time to time. During the course of hearing of the aforesaid matter on 17.12.2025 before the Hon'ble Calcutta High Court, the respondents concerned served their Affidavit-in Opposition in the matter upon the instant appellant. After hearing both sides, the Hon'ble High Court was pleased to grant liberty to the petitioner No. 1 / appellant herein to file its appeal against the impugned adjudication order dated 21.06.2017 before this Tribunal and to direct tha....
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....e by the concerned joint ventures and not the instant appellant which had actually undertaken the entire responsibility for production and dispatch of coal: (i) That the aforesaid activities constitute manufacture and had been so understood both by the revenue and taxpayers alike becomes clear from the fact that the afore-mentioned joint venture companies had already discharged Central Excise duty liability thereon. It was not open to the revenue to recover excise duty on the activity of manufacture of coal and then make an about turn by trying to charge service tax thereon in the appellant's hands. It was of no material consequence that such Central Excise duties had been paid by the joint ventures and not by the instant appellant which was the actual manufacturer. In this regard, reference is invited to a specimen agreement on captive coal mining project through joint venture dated March 21, 2001, wherefrom it would be evident that the instant appellant had been responsible for the funding, deployment of manpower and machinery and all major obligations of the joint venture entities. It is well-settled principle of law that the tax base is mutually exclusive, in that Exci....
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....d in favour of the joint venture companies which had sought registration under the Excise law and paid duty, the said joint venture companies were the manufacturers. The method of raising bills by the instant appellant could not have been determinative of the issue. The adverse observations contained in the impugned order are illegal, arbitrary and liable to be interfered with. The said findings are also ex-facie contrary to the Show Cause Notice dated May 28, 2014 wherein it had been recorded that appellant alone undertook the activity of extraction, processing including crushing and sizing and production of coal. (ii) It is also submitted that integrated activities cannot be vivisected for levying tax, as laid down in the following: a. Jubilant Industries Ltd. v. Commissioner of C.Ex., Ghaziabad, reported in 2013 (31) STR 181 (T) --- appeal therefrom in Jubilant Agri & Consumer Products Ltd. v. CESTAT, reported in 2016 (41) STR 8 (All.); b. Wagad Infraprojects Pvt. Ltd. v. Commr. of CE & ST, Vadodara, reported in 2022 (59) GSTL 95 (T). (iii) The factual basis for application of Section 65(105)(zzzy) of the Finance Act via-a-vis the instant appe....
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....cable to Service Tax. VI. As the principal demand was liable to fail, there can be no reason for confirmation of interest or penal liability. Even otherwise, benefit under Section 80 ought to have extended by deleting penalties under Sections 76 and 77: (i) When the principal tax demand is illegal, the consequential interest demand under Section 75 of the Finance Act or penalty demands cannot sustain. (ii) Further, no concrete reasoning has been assigned in the impugned order so as to justify imposition of penalties under Sections 76 and 77(2) of the Finance Act in the given facts and circumstances. Even otherwise, benefit under Section 80 of the Finance Act, as the said provisions stood during the relevant period, should have been extended. 13.1. In view of the submissions hereinabove, the Ld. Counsel appearing on behalf of the appellant have prayed for setting aside the impugned order and thus, for allowing the present appeal with consequential reliefs. 14. On the other hand, the Ld. Special Counsel representing the Revenue has, inter alia, made the following submissions: - (i) The appellant i.e., EMTA (Eastern Mineral & Trading Agency) Coal Li....
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....the PANEM, manufacturer of coal on principle to principal basis. (iv) The Board vide letter F.No.232/2/2006-CX.4 dt. 12.11.2007, have stated that coal cutting or Mineral Extraction and lifting them up to pit head are essential integral processes and part of mining service and has been made taxable: "MINING SERVICE [section 65(105) (zzzy)]: Presently, geological, geophysical or other prospecting, surface or sub-surface surveying or map-making services relating to location or exploration of deposits of mineral, oil or gas are leviable to service tax under "survey and exploration of mineral service" [section 65(105)(zzv)]. Services such as- - site formation and clearance, and excavation and earth moving, drilling wells for production / exploitation of hydrocarbons (development drilling - well testing and analysis services - sub-contracted services such as deploying workers and machinery for extraction/breaking of rocks into stones, sieving, grading, etc. - outsourced services, provided for mining are individually classified under the appropriate taxable service. Services provided in relation to mining of mineral, oil....
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....is valeat quam per-eat-that an enactment should be construed so as to ensure its validity and effectiveness, not futility. The courts have consistently reiterated that no clause, section, or sub-section should be treated as surplusage or ignored unless absolutely necessary. The aim of interpretation is to read the statute as a whole, harmonizing its parts to preserve legislative intent and ensure that each provision performs its intended role. (vii) Furthermore, appellants have never claimed that they are manufacturer of coal, rather for the same service activities they have paid Service Tax prior to 1.7.2012. (viii) The Department's argument is that the coal mines are never allotted to appellants. The coal mines belong to the Joint Venture Companies & they have correctly taken Central Excise Registration and paid Central Excise Duty being manufacturer/producer of coal. At the instance of Power Utilities/Companies, the mining leases of allotted Coal Blocks were granted in favour of the Joint Venture Companies by the respective State Governments. For supply of coal to the power utilities, the respective Power Utilities entered into "Fuel Supply Agreement" with the ....
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....): Whether the activity of production of coal from mines amounts to manufacture and consequently Central Excise Duty is payable or amounts to mining service on which Service Tax is payable. 17. The issue as to whether the said activity, i.e., preparation of plans for mining, drilling, mining in open cast or underground or both, raising of coal, sizing, dispatching coal, exploration and other activities, as undertaken by the appellant in this case, amounts to manufacture or not, has been examined by this Tribunal in the case of M/s. Integrated coal Mining Limited v. Commissioner of C.G.S.T. & C.Ex., Kolkata North in Service Tax Appeal No. 75094 of 2024 and the same has been decided by this Tribunal vide Final Order No. 76435 of 2025 dated 04.06.2025, wherein it has been observed as under: - "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 appellant has to supply coal of specifications and qualit....
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.... 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 thereon under Section 75 of the Act and as t....
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....ation 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 appellant assessee. This requirement ....
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....f 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 manufactured and cleared the said ....
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.... loss account. The Hon'ble Supreme Court in the case of Bharat Sanchar Nigam Ltd. Vs. UOI imported 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. Spectron Engineers Pvt. Ltd., 2020 (33) G....
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....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 payabl....
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.... been raised by the Revenue against the appellant under the Central Excise Act, of central excise duty, and the payment of excise duty on the said activity is not in question before us. Issue (b): Whether the appellant is providing service to the Joint Venture Companies or not and consequently, whether the appellant is liable to pay Service Tax or not. 20. With regard to the issue as to whether the appellant is providing any 'service' to the Joint Venture Companies or not and whether the appellant would be liable to pay Service Tax in such cases or not, we find that the issue has been examined by the Tribunal in the case of B.G. Exploration and Production India Ltd. v. Commissioner of CGST & CX, Navi Mumbai [2022 (64) G.S.T.L. 578 (Tribunal - Mumbai)] wherein the Tribunal has observed as under: - "19. The issue that arises for consideration in these appeals is whether the entitlement towards "Cost Petroleum" and "Profit Petroleum" under the "Production Sharing Contract" can be treated as the "consideration" for rendering "mining services" to the Government of India. 20. Section 65B of the Finance Act that was inserted w.e.f. 1-7-2012 deals with 'Interpretati....
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....rofit Petroleum" are inherent and embedded part of the Production Sharing Contract and consequently, such components cannot be treated as "consideration" for the "services rendered" by the appellant. 24. To appreciate the contentions raised on behalf of the appellant and the Department, it would be useful to reproduce the relevant clauses of the Production Sharing Contract between the Government of India, ONGC, RIL and the appellant and they are as follows :- ARTICLE 1 Definitions 1.21 "Contract Costs" means Exploration Costs, Development Costs, Production costs, and all other costs related to Petroleum Operations as set forth in Section 3 of the Accounting Procedure. xx xx xx 1.24 "Cost Petroleum" means the portion of the total volume of Petroleum produced and saved from the Contract Area which the Contractor is entitled to take from the Contract Area in a particular period for the recovery of Contract Costs as provided in Article 13. xx xx xx 1.29 "Development Costs" means those costs and expenditures incurred in carrying out Development Operations, as classified and defined in Section 2 of the Accounting Procedure and allowed to be....
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....ance with the Development Plan for the Panna and Mukta Fields. Such costs shall include costs incurred in relation to those items illustrated in Appendix G and matters in connection therewith. Appendix G, Annex G-1, further describes companies' development concept based on an assumed project start date of 1st July, 1993, and Parties understand and agree that the schedules and activities contained in such assessment shall be revised, subject to Management Committee approval, by the Contractor in Contractor's Development Plan first submitted pursuant to this Contract. The Parties agree that for the purposes of this Article 13.1 the Contractor's Cost Recovery Limit shall be the sum of Five Hundred Seventy-seven Million Five Hundred Thousand U.S. Dollars (U $ 577,500,000). xx xx xx 13.2 Exploration Costs (if any) incurred by the Contractor in respect of the Contract Area up to the date of Commercial Productions of Petroleum from the Contract Area shall be aggregated, and the Contractor shall be entitled to recover the aggregated of such Exploration Costs out of the Cost Petroleum from the Contract Area at the rate of one hundred per cent (100%) per annum of such Ex....
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.... Production Sharing of Petroleum Between Contractor and Government 14.1 The Contractor and the Government shall share in the Profit Petroleum from the Contract Area in accordance with the provisions of this Article. The share of Profit Petroleum, in any Financial Year, shall be calculated for the Contract Area on the basis of the Investment Multiple actually achieved by the Companies at the end of the preceding Financial Year for the Contract Area as provided in Appendix D. 14.2 Profit Petroleum 14.2.1 When the Investment Multiple of the Companies at the end of any Financial Year is less than two (2.0), the Government shall be entitled to take and receive five per cent (5%) and the Contractor shall be entitled to take and receive ninety-five per cent (95%) of the total Profit Petroleum from the Contract Area with effect from the start of the succeeding Financial Year. 14.2.2 When the Investment Multiple of the Companies at the end of any Financial Year in respect of any Contract Area is equal to or more than two (2.0) but is less than two and one-half (2.5), the Government shall be entitled to take and receive fifteen per cent (15%) and the Co....
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....oleum in an area which is, or was at the time when such costs were incurred, part of the Contract Area, including expenditures incurred in respect of : xx xx xx 2.2.2 Core hole drilling and water well drilling. 2.2.3 Labour, materials, supplies and services used in drilling Wells with the object of finding Petroleum or in drilling Appraisal Wells provided that if such Wells are completed as producing Wells, the costs of completion thereof shall be classified as Development Costs. xx xx xx 2.2.5 Any Service Costs and General and Administrative Costs directly incurred on exploration activities and identifiable as such and a portion of the remaining Service Costs and General and Administrative Costs allocated to Exploration Operations determined by the proportionate share of total Contract Costs (excluding General and Administrative Costs and Service Costs) represented by all other Exploration Costs. xx xx xx 2.2.7 Any other expenditure incurred in the search for Petroleum not covered under Section 2.3 or 2.4. 2.3 Development Costs Development Costs are all direct and allocated indirect expenditures incur....
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.... Exploration Costs means those costs and expenditures incurred in carrying out Exploration Operations, as classified and defined in Section 2 of the Accounting Procedure and allowed to be recovered in terms of Section 3 thereof. Production Costs means those costs and expenditures incurred in carrying out Production Operations as classified and defined in Section 2 of the Accounting Procedure and allowed to be recovered in terms of Section 3 thereof. "Cost Petroleum" means the portion of the total volume of Petroleum produced and saved from the Contract Area which the Contractor is entitled to take from the Contract Area in a particular period for the recovery of Contract Costs as provided in Article 13. 28. Article 7.1(a) provides that the Contractor shall have the right to recover costs and expenses as provided in this Contract. Article 7.3(a) stipulates that the Contractor shall conduct all Petroleum Operations at its sole risk, cost and expense and provide all funds necessary for the conduct of Petroleum Operations. Articles 13.1 to 13.5 states that the Contractor shall be entitled to recover Contract Costs namely Development Costs, Exploration Costs and Development Cos....
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....it Oil 30% of the remaining Profit Oil after GOI's share 30% of the remaining Profit Oil after GOI's share 40% of the remaining Profit Oil after GOI's share Share of Cost Oil 30% of the Cost Oil of 443,015,613 30% of the Cost Oil of 443,015,613 40% of the Cost Oil of 443,015,613 32. The contention of the appellant is that from a conjoint reading of the various clauses of the Production Sharing Contract, the true commercial nature of the transaction between the Government of India, the appellant, RIL and ONGC is a Joint Venture and involves no rendition of service. 33. This precise issue was examined at length by the Division Bench of the Tribunal in the decision rendered by the Tribunal on 6-10-2021, in the case of the appellant itself, which decision is reported in 2021 (10) TMI 306-CESTAT (Mum). The Tribunal, after referring to the earlier decision of the Tribunal rendered on 11-6-2020 in the case of the appellant, which decision is reported in 2020 (10) TMI 579CESTAT (Mum), the decision of the Tribunal in Mormugao Port Trust and the decision of the Supreme Court in Faqir Chand Gulati and after noticing that an appeal had been filed by the D....
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....ty brings in the required capital, either in monetary terms or in kind or by way of equity. The equity brought in by the co-venturer, in this case by making available man power, cannot be considered as a service rendered to the unincorporated joint venture. It is this capital contribution along with the capital contribution made by others which forms the hotchpotch of the unincorporated joint venture. 24. The Tribunal in Mormugao Port Trust, explained that public private partnerships between the Government/Public Enterprises and Private parties are in the nature of joint venture, where two or more parties come together to carry out a specific economic venture, and share the profits arising from such venture. Such public private partnerships are at times described as collaboration, joint venture, consortium or joint undertaking. Regardless of the name or the legal form in which the same are conducted, they are essentially in the nature of partnership with each co-venturer contributing some of the resources for the furtherance of the joint business activity. The Tribunal held that such public private partnerships meet the test laid down by the Supreme Court in Faqir Chand Gu....
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....able for services between the JV and the co-venturer; and (b) The same had relied upon the decision in the case of Mormugao Port Trust, which had been distinguished by the Tribunal in the case of Badve Helmets Pvt. Ltd. v. CCE [2018 (10) G.S.T.L. 435]. 28. This contention of the Department is entirely misplaced inasmuch as the order dated 11-6-2020 of the Tribunal is not premised on the principle of mutuality. Further, the Department has assumed that merely because the unincorporated association and its members are deemed to be distinct persons, this by itself is enough to establish that a service has been provided by the appellant to the unincorporated joint venture. This presumption is not tenable as the burden to prove that there was a rendition of service for a consideration is a sine qua non for any liability to service tax being attracted. No evidence has been led by the Department to establish this fact. On the contrary, the Tribunal in the decision rendered on 11-62020, arrived at a finding of fact to the effect that the Government of India along with the appellant, RIL and ONGC had entered into a joint venture agreement, whereunder each co-venturer had it....
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....uthorities into a taxable event without identifying the specific activity that links the provider to the recipient." 30. The arrangement in question can also be viewed from another perspective i.e. the appellant had entered into employment contracts on behalf of the unincorporated joint venture as the latter was incapable of entering into contracts in its own name. All activities of the unincorporated joint venture are conducted in the name of its constituent members. Unless such an activity is undertaken by a constituent member as an independent service provider for the joint venture for a consideration, there is neither a rendition of service nor can there be any liability to service tax. This position also evolves from paragraph 4.2 of the Circular dated 24-9-2014, wherein it has been clarified that a member of a joint venture may provide support services to the joint venture for a consideration either in cash or in kind, which alone would be leviable to service tax. 31. Insofar as the decision of the Tribunal in Badve Helmets is concerned, the same is based on entirely different facts. In that case M/s. Vemmar SRL Italy, who was a equity holder had transferred....