No service Tax on Sale of Coal Purchased from CIL to End users at 5% Margin

National Co-Operative Consumers’ Federation of India Ltd Vs Commissioner of Central Excise Delhi III Commissionerate (CESTAT Delhi)

The case of National Co-Operative Consumers’ Federation of India Ltd vs Commissioner of Central Excise Delhi III Commissionerate (CESTAT Delhi) revolves around the appellant’s challenge to the Commissioner of Central Excise’s order confirming the demand of service tax under the category of “Business Auxiliary Service” (BAS).

The appellant, a cooperative society registered under the Multi State Co-operative Societies Act, 2002, holds approximately 80% share capital by the Government of India. It has been allocated coal by Coal India Limited (CIL) for distribution among small tiny consumers in the country. The issue arose when it was alleged that the appellant, while receiving a 5% commission for services provided to CIL, had not discharged their service tax liability under the category of BAS.

The appellant argued that their relationship with CIL was on a principal-to-principal basis, as they purchased coal from CIL for resale to coal consumers. They contended that they were not acting as agents of CIL and therefore not providing marketing or promotion services as per the definition of BAS.

The dispute centered on whether the appellant was engaged in promotion, marketing, and sale of goods belonging to CIL, thus liable to pay service tax under BAS, or whether the transaction was one of sale/purchase.

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