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TMI Blog2024 (11) TMI 1343X X X X Extracts X X X X X X X X Extracts X X X X ..... d by the Commissioner. Service Tax Appeal No. 50212 of 2018 assails the impugned order dated 26.12.2016 while Service Tax Appeal No. 50092 of 2019 assails the impugned order dated 11.10.2018. Under these orders demands of service tax were confirmed along with interest and penalties were imposed on the appellant under sections 76, 77 and 78 of the Finance Act, 1994. [the Finance Act] 2. We have heard Shri B. L. Narasimhan, learned counsel for the appellant assisted by Ms. Shagun Arora and Shri Kunal Agarwal and Shri Manoj Kumar learned authorised representative appearing for the revenue and perused the records. 3. The appellant is a private limited company engaged in beneficiation of coal which is also known as washing of coal. Coal is use ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. For instance, if it is agreed to pay Rs. 100/- as service charges, the appellant receives only, say, Rs. 97/- for its services after deducting Rs. 3/- towards the value of rejects. According to the counsel to the appellant, it paid service tax on the entire amount of service charges received by it either in cash or in kind and in the form of coal rejects. In the above example, the appellant paid service tax on the entire Rs. 100/- although only Rs. 97/- is payable in cash and Rs. 3/- is deducted in lieu of the coal rejects which the appellant could retain. 5. The appellant received its first show cause notice dated 30.03.2012 covering the period 2006-11 proposing service tax demand of Rs. 20,44,02,883/- alleging that the appellant had f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 99,764/- MT. Therefore, the total beneficiation charges were Rs. 5,99,71,680/- and the appellant paid service tax and education cess on this entire amount. 7. Invoice dated 31.03.2012 raised by the appellant on Superintendent Engineer shows the beneficiation charges as Rs. 178.23 per MT and the appellant paid the total amount of service tax on this amount. 8. Of the total amount payable by its client towards the beneficiation charges and service tax, an amount at the rate of Rs. 22.06 per MT was deducted towards value of coal rejects. A perusal of these invoices also shows that the appellant had paid service tax on the entire amount of beneficiation charges which it had received and had not deducted any amount which it had not received in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had paid service tax on the charges. The only dispute is whether the appellant had paid service tax on the entire amount of service charges which it received or it had not paid service tax on the value of rejects which it had retained. 14. The agreements entered into between the appellant and its clients clearly provide for the appellant to retain the coal rejects. These agreements also attribute a value to the coal rejects in terms of rupees per MT of washed coal. This amount was deducted from the service charges paid to the appellant by its clients. In other words, the appellant received some of the consideration in cash and some in the form of coal rejects. The value attributed to the coal rejects is also indicated in the agreements. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,62,04,738/- 52,87,79,978/- 97,74,33,230/- 17. What is evident from the above is that the department demanded service tax on the price at which the appellant had sold the coal rejects. This is not sustainable because service tax is not a tax on the sale of goods. If the appellant had received some coal rejects, for instance, and an amount of Rs. 100 is deducted from the service charges by the client towards these coal rejects, service tax has to be paid without this deduction of Rs. 100/- from service charges. The appellant did so. Now, if the appellant subsequently sells this coal rejects either as such or after mixing it with some other coal and sells them for Rs. 150, this amount is the value of coal the rejects sold by the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X
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