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TMI Blog2024 (5) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... rejects and rebate granted in lieu of coal rejects in the value of service of beneficiation of coal and demand of service tax thereon. 2. The facts of the case are as under: i. M/s. Earth Minerals Company Ltd. (hereinafter referred to as the 'Appellant') is, inter alia, engaged in the activity of washing of coal (a method of coal beneficiation) and supply of the washed coal to the clients. The Appellant was discharging service tax on the activity of coal washing by disclosing the same in ST-3 returns under 'Business Auxiliary Service' (here-inafter referred to as 'BAS'). ii. During FY 2009-10 to FY 2011-12 (here-in-after referred to as 'the impugned period'), the Appellant was rendering the service of coal washing to Appellant's holdi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t contracts for the impugned period. v. Vide letter dated 18.02.2013, the Appellant submitted the requested documents with the Department. 2.1. Thereafter, a Show Cause Notice dated 14.06.2013 was issued to the Appellant, alleging undervaluation of taxable service of washing of coal by not including the sale value of coal rejects as well as the rebate granted towards coal rejects in the taxable value. The Appellant furnished reply to the Show Cause Notice vide letter dated 22.11.2013 and filed an additional written submission dated 20.12.2013. 2.2. However, being dissatisfied with the submissions made by the Appellant, the Ld. Commissioner passed the impugned order dated 28.01.2014 confirming the demand proposed vide the Show Cause Noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without prejudice, washing of coal amounts to 'mining service' and does not qualify as a business auxiliary service. Therefore, it is contended that on that amount also, they are not liable to pay service tax. 5. He further submitted that the appellant has discharged VAT on sale of coal rejects; the payment of VAT and service tax are mutually exclusive and therefore, as the appellant has already paid VAT, they are not liable to pay service tax on the said transaction. To support this contention, he relied on the decision in the case of Safety Retreading Co. (P) Ltd. v. Commissioner of Central Excise, Salem [2017 (48) S.T.R. 97 (S.C.) and Imagic Creative (P) Ltd. v. Commissioner of Commercial Taxes [2008 (9) S.T.R. 337 (S.C.)]. 6. He furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tral Statue for stacking, handling, prevention of fire & disposal of reject ................................. 12.0 ACCEPTED RATE: Rate accepted for beneficiation of raw coal is Rs. 182.36 (Rs. One hundred Eighty Two & Paisa thirty six only) per MT of raw coal (considering rebate on reject) (exclusive of Service Tax). Above beneficiation charges are inclusive of following items: a) Raw Coal transport from Mine to washery. b) Processing of coal and beneficiation including reject handling. c) Rebate on reject (Rs. 9.80 per MT of raw coal) d) Transport of beneficiated coal to railway siding. e) Loading of beneficiated coal in wagons. Above rates are inclusive of Taxes & levies except service tax. The service tax shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een retained by the appellant, which has become the property of the appellant in terms of the agreement of service provided by the appellant. 10.4. Further, during the process of beneficiation of coal, certain coal rejects are generated which are required to be disposed of in an environment-friendly way and the responsibility of such disposal is on appellant as per the agreement. Therefore, transaction of sale of coal rejects either 'as-is' or upon mixing the same with good quality of coal is an independent transaction. It is a transaction of sale on which no Service Tax is payable and this transaction has no nexus with the activity of coal washing service provided by the appellant. 10.5. We also take note of the fact that disposal of coa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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