ST – Penalty – on Mining of coal and Cargo Handling Service before 01.07.2007

PJ/Case Laws/2011-12/1415

ST – Penalty – on Mining of coal and Cargo Handling Service before 01.07.2007 – demand not sustainable

Citation: -2011 (24) S.T.R. 407 (Tri. - Kolkata)

Case:-CHINDIT CARRIERS PVT. LTD. V/s COMMR. OF C. EX. & SERVICE TAX, RANCHI

Issue:-Whether penalty is payable on the services of Mining of coal and Cargo Handling Service before 01.07.2007?

Brief Facts:The Applicant filed this Application for waiver of pre-deposit of the amount of Service Tax of Rs. 55, 07,038 and penalties. The demand is for the period from 10-4-2004 to 24-3-2006 treating the activity undertaken by the Applicant as Business Auxiliary Service and Cargo Handling Service.

Appellant’s Contention:Appellant’s contended that the Agreement dated 13-1-2005 is in respect of extraction and transfer of coal by deploying surface miners and other allied equipment on hire basis, and the second Agreement is in respect of loading and transportation of raw and washed coal within the mining area. The mining activity comes under the ambit of Service Tax with effect from 1-7-2007 and the Tribunal in the case of C.C.E., C & ST, Bhubaneswar v. Vinshree Coal Carriers Pvt. Ltd. 2008 (10) S.T.R. 473 (Tri.-Kolkata) held that transportation of coal within the mining is not subjected to Service Tax under the Cargo Handling Service. Hence, the demand is not sustainable.

Respondent’s Contention:Revenue submitted that the Applicant had not undertaken any activity of blasting, which is an integral part of mining. Hence, it is a Business Auxiliary Service, i.e. processing of goods on behalf of the others.

Reasoning of the Judgment:The Tribunal has gone through the Agreements, and one Agreement is in respect of extraction and transfer of coal, and the second one is in respect of transportation of coal within the mining area. As the Applicant is undertaking the activity of mining, which comes under the scope of Service Tax with effect from 1-7-2007, the transportation of coal within the mining is not subjected to Service Tax, as held by the Tribunal in the case relied upon by the Applicant. Hence, the tribunal finds that the Applicant has a strong prima facie case in their favour. Accordingly, pre-deposit of the Service Tax and penalties are waived and recovery of the same is stayed during pendency of the Appeal.

Decision:Stay petition allowed.

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PJ/Case Laws/2011-12/1415

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