Both Sales Tax And Service Tax Cannot Be Made Applicable On The Same Transaction: CESTAT

The Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has observed that both sales tax and service tax cannot be made applicable on the same transaction.

The two-member bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) has observed that when the appellant is only cutting the size of the coal to be provided to the customers, it cannot be said that any service has been offered by the appellant to the buyer of coal.

The appellant/assessee asserted that at the time of sale, it recovered the basic price of the coal, coal sizing charges, surface transport charges, and other levies from the customers and paid the applicable excise duty/sales tax on the said amount.

The department believed that by recovering sizing charges, the appellant provided a taxable service under the category of ‘business auxiliary service'. A show-cause notice was issued by the department proposing the charges, and the demand was ultimately confirmed by an order.

The tribunal relied on the Supreme Court's decision in the case of Bharat Sanchar Nigam Ltd vs. Union of India, which held that it is not possible to apply both sales tax and service tax to the same transaction.

Case Title: M/s South Eastern Coalfields Ltd. Versus Commissioner of Central Goods And Service Tax, Customs And Excise, Jabalpur

Citation: Service Tax Appeal No. 50422 of 2017

Date: 02.03.2023

Counsel For Appellant: Rajeev Agarwal

Counsel For Respondent: Harshvardhan

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