Principal Commissioner Vs Aryan Coal Benefications Pvt. Ltd. (CESTAT Delhi)
The Revenue filed an appeal against Order-in-Original No.02-03/Commr./CGST/Audit-I/2018 dated 05.07.2018, which had decided five issues in favour of the assessee. The present appeal was confined to whether washing of coal undertaken by the respondent for its clients was taxable under “Business Auxiliary Services” under Section 65(19)(v) read with Section 65(105)(zzb) of the Finance Act, 1994, for the period from 16.06.2005 to 31.03.2007. The respondent was engaged in washing raw coal on behalf of its clients. The Tribunal noted that beneficiation or washing of coal was specifically made taxable with effect from 01.06.2007 under Section 65(105)(zzzy) as a service “in relation to mining of minerals, oil or gas.” For the earlier period, the Revenue sought to classify the activity under Business Auxiliary Service covering production or processing of goods for, or on behalf of, the client.
The respondent relied upon earlier Tribunal decisions in its own case and in other cases, contending that the issue had already been decided in favour of the assessee. The Revenue’s authorised representative also accepted that the issue had consistently been decided in favour of the assessee. The Tribunal found that the decisions in Aryan Energy (P) Ltd., Spectrum Coal & Power Ltd., and Aryan Coal Benefications Pvt. Ltd. consistently held that beneficiation of coal was part of mining activity and became liable to service tax only from 01.06.2007. It further considered Global Coal & Mining Pvt. Ltd. Vs. CST, Delhi – 2020 (36) GSTL 77, which held that an activity covered under the mining service entry from 01.06.2007 could not be categorised under Business Auxiliary Service for the earlier period. The Tribunal also referred to the Bombay High Court decision in Indian National Shipowners Association Vs. Union of India – 2009 (14) STR 289 (Bombay).
Following the settled position, the Tribunal held that beneficiation/washing of coal was taxable as a service in relation to mining of minerals only from 01.06.2007 and that no service tax demand could be made under Business Auxiliary Service for the period before that date. The impugned order was affirmed and the Revenue’s appeal was dismissed.
Cases Discussed
- Global Coal & Mining Pvt. Ltd. Vs. CST, Delhi (CESTAT), 2020 (36) GSTL 77
- Aryan Coal Benefications Pvt. Ltd. Vs. CST (CESTAT Delhi), 2013 (29) STR 74 (Tribunal-Delhi)
- Spectrum Coal & Power Ltd. Vs. CCE, Raipur (CESTAT Delhi), 2012 (28) STR 510 (Tribunal-Delhi)
- Indian National Shipowners Association Vs. Union of India (Bombay High Court), 2009 (14) STR 289 (Bombay)
- Aryan Energy (P) Ltd. Vs. CC & CE, Hyderabad (CESTAT-Bangalore), (2008) 14 STJ 394 (CESTAT-Bangalore)
- Aryan Energy P.Ltd. (CESTAT), 2009 (13) STR 42 (Tri.)
FULL TEXT OF THE CESTAT DELHI ORDER
1. Revenue has filed the present appeal challenging the Order-in-Original No.02-03/Commr./CGST/Audit-I/2018 dated 05.07.2018, whereby the learned Commissioner decided five issues in favour of the assessee.
2. The present appeal is limited to the issue, where it is held that process of washing of coal is not taxable under the “Business Auxiliary Services” under sub-clause (v) of Clause 19 of Section 65 read with Section 65(105)(zzb) of the Finance Act, 1994 during the period 16.06.2005 to 31.03.2007.
3. The respondent is engaged in the process of washing of raw coal on behalf of their clients.
4. The activity of beneficiation or washing of coal were made liable to service tax w.e.f. 1.6.2007 as defined in Section 65(105)(zzzy), which reads as :-
”65(105) “taxable service” means any service provided or to be provided ……
(zzzy) to any person, by any other person in relation to mining of minerals, oil or gas.”
In so far as the period prior to 1.6.2007, which is the subject matter under challenge, the Revenue seeks to tax the activity of beneficiation/washing of coal under the heading as ‘Business Auxiliary Service in view of Clause (v) of Section 65(19), which is substituted by the Finance Act, 2005, w.e.f. 16.06.2005, read as under:-
”(19) “Business Auxiliary Service” means any service in relation to –
(i)…….
(v) production or processing of goods for, or on behalf of, the client, “
5. We have heard Ms.Jaya Kumari, Authorised Representative for the appellant/Revenue and Shri Sumit Goel, Shri Satish Kumar Sharma and Shri Abhishek Thakral, Advocates for the respondent.
6. The submissions of counsel for the respondent is that the issue is no longer res integra and the same has been decided by the Tribunal in earlier pronouncements in their own case in Aryan Coal Benefications Pvt. Ltd. Vs. CST – 2013 (29) STR 74 (Tribunal-Delhi). Learned Counsel has also referred to the earlier decisions in Aryan Energy (P) Ltd. Vs. CC & CE, Hyderabad – (2008) 14 STJ 394 (CESTAT-Bangalore) and also Spectrum Coal & Power Ltd. Vs. CCE, Raipur – 2012 (28) STR 510 (Tribunal-Delhi).
7. Learned Authorised Representative also agrees to the submissions that the issue is decided taking a consistent view in favour of the assessee.
8. We find that the decision of the Tribunal in Aryan Energy (P)Ltd. (supra), Spectrum Coal & Power Ltd. (supra) and Aryan Coal Benefications Pvt. Ltd. (supra) 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. The observations of the Tribunal in the earlier round of litigation of the respondent Aryan Coal Benefications (supra) observed as under:-
“2. The said appeal was heard along with the appeal of M/s. Spectrum Coal wherein an identical issue was involved in Tribunal’s vide its order No.ST/A/521/12 dated 5-7-2012 [2012 (28) STR 510 (Tri.-Delh.) has referred to the earlier decision of the Tribunal in the case of Aryan Energy P.Ltd. [2009 (13) STR 42 (Tri.)] and has held that the activity of beneficiation of washery and raw coal is activity of mining which was introduced for the purpose of service tax w.e.f. 16.2007. As such, it was held that prior to the said period no service tax was leviable on beneficiation for better appreciation, we reproduce relevant para of the said decision of the Tribunal in the case of Aryan Energy P. Ltd.
Following the above decision of the Tribunal in the case of Aryan Energy P.Ltd. demand of duty in the case of M/s.Spectrum Coal and Power Ltd., was set aside. Inasmuch as theperiod involved in the present appeal is prior to 1.6.2007 by following the earlier order, we hold that confirmation of service tax on the activity of benefication of coal was not liable to service tax during the relevant period. The demand accordingly, is set aside along with setting aside of penalty.” (Emphasis Supplied)
9. Learned Counsel for the respondent has pointed out that the appeal filed by the Revenue (CAD No.37840 of 2014) against the aforesaid decision was dismissed on the ground of delay, leaving the question of law open. Learned Counsel also referred to the decision in Global Coal & Mining Pvt. Ltd. Vs. CST, Delhi – 2020 (36) GSTL 77, where the assessee had paid service tax on the activity of washing of coal w.e.f. 1.6.2007, being a service in relation to mining under Section 65(105)(zzzy) of the Act, however, the Department have issued show cause notice on the ground that the service provided by the assessee would fall under the “Business Auxiliary Service” and, therefore, would be liable to pay service tax w.e.f. 16.06.20025. Taking note of the decision of the Bombay High Court in Indian National Shipowners Association Vs. Union of India – 2009 (14) STR 289 (Bombay), where it was held that introduction of a new entry and inclusion of certain services in that entry would presuppose that earlier there was no entry covering the said service. Accordingly, it was held:-
“21. In the instant case, the definition of BAS did not undergo any change when a new service ‘in relation to mining’ was introduced with effect from 1st June, 2007. The Department admits that with effect from 1st June, 2007, the activity carried out by the appellant is covered under the category of service in relation to mining. This activity could not, therefore, have been categorised under BAS prior to 1st June, 2007.
22. Thus, the demand of service tax in the impugned order under BAS from 16 June, 2005 to 30 May, 2007 is not justified.” (emphasis supplied).
10. We find 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”. We find 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 and the appeal filed by the Revenue stands dismissed.
[Order pronounced on 16th April, 2024].
