CESTAT: Both Sales Tax and Service Tax Cannot be made Applicable on the Same Transaction
CESTAT: Both Sales Tax and Service Tax Cannot be made Applicable on the Same Transaction
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi Bench observed that both sales tax and service tax cannot be made applicable on the same transaction.
The division-member bench of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) were hearing an appeal filed by the appellant- M/s South Eastern Coalfields Ltd against an order dated 9 December, 2016 passed by the Commissioner confirming the demand of service tax on sizing of coal under ‘business auxiliary service’ with penalty and interest has been assailed by M/s. South Eastern Coalfield Ltd in the appeal.
The dispute related to the period 2014-15 and the appellant asserted that at the time of sale it recovered 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 however, believed that by recovering sizing charges, the appellant provided taxable service under the category of ‘business auxiliary service.’ A show cause notice was issued by the department proposing such charges and the demand was ultimately confirmed by an order that has been impugned in the appeal.
The bench while placing reliance in the decision passed by the Supreme Court in Bharat Sanchar Nigam Ltd vs. Union of India (2006), held that both sales tax and service tax cannot be made applicable on the same transaction.
The CESTAT observed, “in this view of the matter, 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.”
Accordingly, the CESTAT was of the view that the order impugned dated 9 December, 2016 therefore, cannot be sustained and set aside. The appeal was accordingly allowed.
