Transportation of coal in mining area couldn’t be categorized as mining service: CESTAT

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The assessee under two different agreements entered into with South Eastern Coal Fields (SECL) provided services of loading and transportation/movement of coal in the mining area of SECL.The Adjudicating Authority held that for the period upto 30-6-2012 the activity of transportation/movement of coal in the mining area was liable for payment of tax under the category of ‘mining service’. With effect from 1-7-2012, he took the view that the activities carried out under loading agreement as well as transportation agreement were to be considered as a ‘bundled service’ as per the provision of section 66F. These were to be considered as a single service of mining. Therefore, the assessee was liable to payment of service tax without the abatements available for the ‘goods transport agency service’ for the activity comprised in both the agreements. The differential service tax had been ordered to be paid along with interest and penalties.

The CESTAT of New Delhi Branch vide Final Order Nos. 52632-52633/2018 dated July 23, 2018 stated that with effect from 1-7-2012, the definition of individual services has been done away with. But the benefit of abatements granted to goods transport agency has been continued even for the period subsequent to 1-7-2012. The Notification Nos. 26/2012- ST, dated 20-6-2012 and 30/2012-ST, dated 20-6-2012 issued with effect from 20-6-2012 are pari materia to provisions of law prior to amendment. It is further not disputed that the service tax on the transportation activity has been paid by the recipient, i.e., SECL even for the subsequent period.Even though the activity of transportation of coal has taken place within the mining area, the Apex court in the case of Singh Transporters (supra) has taken the view that such activity will be classifiable only under goods transport agency and not under mining. In these circumstances, taking a different view for the period with effect from 1-7-2012 is not warranted.

Consequently, even for the period with effect from 1-7-2012, the activity of transportation of coal from the coal face to the railway siding will continue to enjoy the benefit available to goods transport agency and cannot be bundled into a single service under section 66F along with lifting of coal at the coal face into the activity of mining. In the result, we set aside the demand of service tax in the impugned orders and allow both the appeals.

Citation: [2018] 97 taxmann.com 421 (New Delhi – CESTAT)