Coal Transportation From Pitheads Of Mines To Railway Sidings Not "Mining Of Mineral": CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that the coal transported from the pitheads of the mines to the railway sidings would be classified under the head "transport of goods by road" service, and the activity does not involve any taxable service in relation to "mining of minerals."

The two-member bench headed by Justice Dilip Gupta (President) and P.V. Subba Rao (Accountant Member) has observed that the Commissioner of Appeals was, therefore, not justified in holding that the appellant had undertaken the activity of mining services with effect from June 1, 2007.

The appellant/assessee provided services to Western Coalfields Limited in different areas, claiming it to be under "goods transport agency service." The assessee claimed that Western Coalfields Limited discharged the service tax liability under the reverse charge mechanism.

A show-cause notice was issued to the appellant on the allegation that the services provided by the appellant to Western Coalfields Limited were taxable under various services, including "cargo handling services" and "mining services."

The adjudicating authority and the Commissioner (Appeals) have upheld the demand for service tax under "cargo handling services" for the period prior to June 1, 2007, and under "mining services" for the period after June 1, 2007, with penalties.

The appellant contended that the nature of services provided by the appellant, as is clear from the order passed by the Joint Commissioner, is the loading of coal into tippers by pay loaders from the mining area of Western Coalfield Limited, transportation of coal by tippers to the railway siding, and unloading of coal.

The appellant relied on the decision of the Supreme Court in the case of Commissioner of Central Excise and Service Tax, Raipur vs. Singh Transporters, in which the activity of transportation of coal would be "transport of goods by road service" and not "mining" or "cargo handling service."

The taxable service of "mining" under Section 65 (105) (zzzy) of the Finance Act means any service provided or to be provided to any person by any other person, in relation to the mining of minerals, oil, or gas.

The Commissioner has placed reliance on the definition of "mines" under the Mines Act, 1952, and has observed that all processing, including handling and movement of coal from one point of mines to the dispatch point of mines, are activities carried out in relation to the mining of minerals.

The tribunal, while allowing the appeal, held that the activity undertaken by the appellant would fall under the heading "transportation of goods by road."

Case Title: Chhaya Mahalley Versus Commissioner, Customs, Central Excise & CGST

Citation: Service Tax Appeal No. 50415 Of 2016

Date: 02/12/2022

Counsel For Appellant: Advocates Bipin Garg, Kainaat

Counsel For Respondent: Radhe Tallo

Click Here To Read The Order