Page 122 - GSTL_7th May 2020_Vol 36_Part 1

80 GST LAW TIMES [ Vol. 36
mining’ was imposed from 1 June, 2007 and if this activity was covered under
BAS, on which Service Tax was levied earlier, the Legislature would not have
introduced a separate category of taxable service under Section 65(105)(zzzy) of
the Act without making any amendment in the definition of BAS. The decision of
the Tribunal in Aryan Energy (P) Ltd. v. Commissioner of Customs and Central Ex-
cise, Hyderabad - 2009 (13) S.T.R. 42 (Tri. - Bang.) was also relied upon in the reply.
During the course of hearing, the appellant also placed reliance upon the deci-
sions of the Tribunal in M/s. Aryan Coal Beneficiations Pvt. Ltd. v. Commissioner of
Service Tax, New Delhi - 2012 (9) TMI 205-CESTAT, New Delhi = 2013 (29) S.T.R.
74 (Tribunal) and M/s. Spectrum Coal and Power Ltd. v. Commissioner of Central Ex-
cise, Raipur - 2012-TIOL-1125-CESTAT-DEL = 2012 (28) S.T.R. 510 (Tribunal). It
was also stated that cost of transportation of coal from mines to washery cannot
be included in the value of taxable services as they were reimbursements and in
support of this contention reliance was placed on the decision of the Delhi High
Court in Inter Continental Consultations and Technicians Pvt. Ltd. v. Union of India -
2013 (29) S.T.R. 9.
5. The Adjudicating Authority, however, did not accept the submis-
sions made by the appellant. After noticing that the Appellant was engaged in
the washing of coal purchased by KPCL from M/s. Singareni Collieries Compa-
ny Ltd. in raw form, the Principal Commissioner observed that this activity was a
service to KPCL covered under BAS since it would be an activity of ‘processing
of goods for or on behalf of the client’ w.e.f. 16 June, 2005, but the appellant did
not pay any Service Tax for this activity from 16 June, 2005 to May, 2007. The
submission of the appellant that washing of coal is a part of mining process and
would fall within the scope of service ‘in relation to mining’, which was a taxable
service only from 1 June, 2007, was not accepted. The relevant portion of the or-
der is reproduced below :-
“On bare reading of aforesaid budgetary changes, it emanates that all allied
activities which are used in relation to the exploration and exploitation of
mineral etc. which were falling under any other taxable service prior to the
introduction of the new entry before 1-6-2007 are consolidated under the
new separate entity “Mining Service” and more importantly even when re-
lated services, obviously referring to the activities in relation to the explora-
tion and exploitation of minerals, are outsourced, the same will be taxable
under this category, i.e., new entry of “Mining Service”. It clearly shows
that other related services prior to the introduction of new entry, the same
would be changed/merged and made taxable under the new entry of “Min-
ing Service”. This negates the claim of the party and if this activity was cov-
ered under the business auxiliary service, the legislature would not have in-
troduced mining as a separate category of taxable service under Section
65(105)(zzzy) because it was categorically specified by the Government
during budget changes 2007-08 to bring and club all allied activities & other
outsourced services related to exploration and exploitation of mineral etc.
which were falling in other heads of taxable services into a new entry of
‘Mining Service’. In view of the above, it is abundantly clear that party’s ac-
tivity which is a outsourced service of beneficiation or washing of coal on
behalf of KPCL as per the agreement entered by them aptly categorized as
the processing of goods for, or on behalf of the client and well covered un-
der the “Business Auxiliary Service” from the period 16-6-2005 to May,
2007 before the same made directly taxable under the new head of service
“Mining Service” w.e.f. 1-6-2007.”

GST LAW TIMES  7th May 2020  122