Ambey Mining Private Limited Vs Commissioner of Service Tax-II (CESTAT Kolkata)
Summary: M/s. Ambey Mining Private Limited challenged the Order-in-Original No. 05/Commr/ST-II/Kol/2015-16 dated 22.05.2015, whereby the Commissioner of Service Tax-II, Kolkata confirmed substantial service tax demands under the category of “Mining Services” and denied CENVAT credit on certain inputs and input services. The appellant had undertaken contracts for transportation of coal and overburden within mines and outside mines. The department treated transportation of coal to destinations outside mines with incidental loading/unloading, transportation within mines, shifting and feeding coal into power-plant hoppers, and free supply of diesel under composite mining contracts as taxable Mining Services. A service tax demand of Rs.18,76,33,250/- was ultimately confirmed under Mining Services, while Rs.8,53,102/- was confirmed under Business Auxiliary Service on Rs.75,60,332/- shown as “Handling Charges” in the books. CENVAT credit of Rs.37,13,615/- on five tippers, Rs.8,64,278/- on M.S. Channel and M.S. Angle used for repairs, and Rs.6,14,095/- on invoices in the names of third-party contractors were also disputed.
On the principal classification issue, the Tribunal examined the nature of the contracts and found that the appellant’s activities were mainly transportation of coal both within and outside the mining area. Applying the statutory classification framework under Section 65A of the Finance Act, 1994 and considering the nature of the actual activity, the Tribunal held that transportation was most appropriately classifiable as Goods Transport Agency service. The liability to pay service tax on such transportation rested upon the service recipient under the applicable reverse-charge mechanism. The Tribunal relied upon the Supreme Court decision in CCE Vs. Singh Transporters, reported in 2017 (4) G.S.T.L. 3 (S.C.), and the CESTAT Kolkata decision in MaaKalika Transport Pvt. Ltd. Vs. Commissioner of CGST & CE, reported in (2023) 8 Centax 273 (Tri.-Cal). Accordingly, transportation within and outside the mines could not be classified as Mining Service. The shifting and feeding of coal into power-plant hoppers also occurred inside power plants and could not be treated as Mining Service.
