Page 126 - GSTL_7th May 2020_Vol 36_Part 1

84 GST LAW TIMES [ Vol. 36
13. The submissions advanced by Learned Counsel for the appellant
and the Learned Authorised Representative of the Department have been con-
sidered.
14. The period in dispute is from 16 June, 2005 to 31 March, 2009 and
the issue is about the classification of the activity of beneficiation of coal. Accord-
ing to the Department this would fall under the category of BAS prior to 1 June,
2007, while according to the appellant it is ‘in relation to mining’ and, therefore,
taxable with effect from 1 June, 2007 only. The activity of beneficiation of coal
involves washing of coal with a view to remove the high ash contents and to
make it fit for use in the generation of power. The demand has been confirmed
under BAS, which was introduced as a taxable service with effect from 16 June,
2005 for the reason that the said activity involves ‘processing of goods for and on
behalf of the client’. The appellant has been paying Service Tax on the beneficia-
tion charges received for the said activity under the category of mining services
w.e.f. 1 June, 2007, when this service was for the first time subjected to levy of
Service Tax. The impugned order has confirmed the demand of Service Tax from
16 June, 2005 upto 31 May, 2007 under BAS. The period from 1 June, 2007 to 31
March, 2009 was included in the show cause notice though the appellant had
deposited Service Tax under mining related service, only for the reason that it
was alleged the appellant had not paid Service Tax on reimbursements received
from customers during the period. According to the appellant, this amount was
not included in the value of services as reimbursements do not form part of value
of taxable services.
15. The first issue that needs to be decided is as to whether the activity
of beneficiation of coal carried out by the appellant would fall under BAS. Ac-
cording to the appellant, the said activity will be covered under the scope of min-
ing related services under Section 65(105)(zzzy) of the Act w.e.f. 1 June, 2007. The
contention is that on introduction of such a service from 1 June, 2007, there was
no amendment in the definition of BAS under Section 65(19) read with
65(105)(zzb) of the Act and, therefore, the activity covered under a new category
of mining related services cannot be classified under the existing category of BAS
prior to 1 June, 2007.
16. This issue was examined at length by a Division Bench of the Tri-
bunal in Aryan Energy. The appellant therein was also engaged in the activity of
beneficiation of coal on behalf of the KPCL. The Adjudicating Authority classi-
fied the said activity under BAS. The Division Bench of the Tribunal observed
that the said activity would be covered under mining services with effect from 1
June, 2007 and Service Tax could not be levied under BAS for any period prior to
1 June, 2007. The relevant portion of the order of the Division Bench is repro-
duced below :-
14. On going through the contract with the KPCL, we are satisfied that the dom-
inant activity of the appellant is beneficiation/washing of coal. The appellant has
been associated in the meeting of expert Committee (Thermal and coal min-
ing) held on 19th and 20th December, 2000 on coal mining projects. The
Coal Mines (Nationalisation) Act, 1973 defines under Section 2(h) ‘Mine’.
‘Mine’ means any excavation where any operation for the purpose of
searching for or obtaining minerals has been or is being carried on, and in-
cludes (i) all borings and bore holes; (ii) all shafts, whether in the course of
being sunk or not; All lands, buildings, and equipments belonging to the
owner of the mine, and in, adjacent to or situated on the surface of, the
mine where the washing of coal obtained from the mine or manufacture,
GST LAW TIMES  7th May 2020  126