Calcutta High Court
Commissioner Of Service Tax Kolkata vs M/S Emta Coal Limited on 14 May, 2025
Author: T.S Sivagnanam
Bench: T.S Sivagnanam
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OD - 8
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION [CENTRAL EXCISE]
ORIGINAL SIDE
PRESENT :
THE HON'BLE CHIEF JUSTICE T.S SIVAGNANAM
And
THE HON'BLE JUSTICE CHAITALI CHATTERJEE (DAS)
CEXA/8/2025
IA NO: GA/2/2025
COMMISSIONER OF SERVICE TAX KOLKATA
VS
M/S EMTA COAL LIMITED
For Appellant : Ms. Manasi Mukherjee, Advocate
Mr. Bijitesh Mukherjee, Advocate
For Respondent : Mr. Samir Chowdhury, Senior Advocate
Mr.Abhijit Biswas, Advocate Mr. Bhaskar Sengupta, Advocate Heard on : May 14, 2025 Judgment on : May 14, 2025 T.S. SIVAGNANAM, CJ : This appeal has been filed by the revenue under Section 35G of the Central Excise Act, 1944 (the Act) challenging the order passed by the Customs, Central Excise and Service Tax Appellate Tribunal, East Zonal Bench, Kolkata, (Tribunal) in Service Tax Appeal No.277/2012 dated 30.11.2023. 2
2025:CHC-OS:69-DB The revenue has raised the following substantial questions of law for consideration :
"(i) Whether Learned Tribunal erred in not considering that the demand of Rs.26,01,36,069/- for the period from 01.06.2007 to 31.3.2008 on Mining Services, which stood accepted by the said Notice-appellant and thus paid, and therefore should not have been remanded the said demand, as there was nothing on record to show that the instant payments were made under protest, neither has the Hon'ble Tribunal made any observations to that effect?
(ii) Whether Learned Tribunal erred in remanding the said demand when the amount of Rs.26,01,36,069/- was paid prior to issuance of SCN, as accepted by the said M/s. EMTA and thus paid?
(iii) Whether in the facts and circumstances the Learned Tribunal erred in dropping the demand of Rs.1,22,64,061/- in respect of 'Cargo Handling Services' and remanding the Rs.26,01,36,069/- on 'Mining Servie'?
We have heard Ms. Manasi Mukherjee, learned advocate appearing for the appellant and Mr. Samir Chowdhury, learned senior advocate appearing for the respondent.
In order to have better clarify, we quote the issues which were taken up for consideration by the adjudicating authority in order-in-original dated 14.3.2012.
1. Rs.11,64,74,435/- for the period from 16.6.05 to 31.5.07 against Site Formation and CEKA9 Clearance, Excavation and Earth Moving and Demolition Services.
2. Rs.1,22,64,061/- for the period from 1.4.2005 to 31.05.2007 against Cargo Handling Service.
3. Rs.14,07,10,518/- for the period from 1.6.2007 to 31.03.2008 against Mining 3 2025:CHC-OS:69-DB Service.
4. Rs.26,01,36,069/- for the period from 1.04.08 to 31.03,2010 against Mining Service.
5. Rs.2,09,43,980/- for 2008-09 against the difference between Balance Sheet & Service Tax Return figures.
6. Rs.3,68,43,808/- for 2008-09 against the income allegedly related to surreptitious mining services and disclosed u/s 132(4) of IT Act, 1961.
7. Rs.70,350/- in 2008-09 as service recipient of Management & Business Consultant's Service from foreign country.
Among the above issues, the issues in serial nos. 1 and 5 were decided in favour of the assessee, which were challenged by the revenue before this Court in CEXA/9/2025 which was dismissed by judgment dated 14.5.2025. So far as issue no.2 (supra) which related to cargo handling service, the adjudicating authority has held against the assessee and the asssessee preferred appeal before the Tribunal, namely, Service Tax Appeal No.277/2012 which has been allowed and, therefore, the revenue has filed this appeal, namely, CEXA/8/2025. So far as issue nos. 3 and 6 are concerned, the Tribunal by the impugned order has remanded the matter to the adjudicating authority to enable the assessee to give invoice-wise details of the deductions made by the client to prove that those amounts were not received by the assessee so as to get exemption from service tax payment. They were also required to show the details of the client's ledger towards the value of invoice amount debited in their ledger, amount 4 2025:CHC-OS:69-DB received from the client and credit note passed for the balance amount so as to tally the invoice value in the ledger. All these details were required by the assessee to produce in respect of the invoices raised during the period 2007-2010, along with reconciled statement, which was required to be verified by the adjudicating authority in a detailed manner. The assessee has not challenged that portion of the impugned order passed by the Tribunal remanding the above two issues. Similarly, issue no.7 also is not the subject-matter of challenge presumably because of the low value of the demand. Thus, what is required to be decided in this appeal is only the issue, namely, serial no.2 which pertains to cargo handling services and issue no.4 which is the demand for Rs.26,01,36,069/- for the period from 1.4.2008 to 31.3.2010 against mining services. So far as the amount of Rs.26,01,36,069/- is concerned, the Tribunal has remanded the same also for a fresh consideration. To this extent, the order passed by the Tribunal is incorrect since the assessee had accepted the said demand and they have paid the amount and, therefore, the question of remanding the same to the adjudicating authority for fresh consideration could not arise. Therefore, to that extent, the order passed by the learned Tribunal calls for interference and, accordingly, the remand of that portion of the demand, namely, Rs.26,01,36,069/- is set aside and the remand made by the Tribunal to the adjudicating authority in respect of the demanding amount stands affirmed. The appeal filed by the revenue to that extent stands allowed.
This leaves us with only one issue, namely, cargo handling services. The learned Tribunal has taken note of its order passed in respect of the site formation service wherein the Tribunal had affirmed the order passed by the adjudicating authority 5 2025:CHC-OS:69-DB dropping the demand in respect of site formation services on the ground that the contract entered by the assessee with third parties was a composite contract and payments were made based upon the quantity of coal which has been raised. It is not in dispute that as per original contract dated 14.3.1997, the assessee was to provide all the services upto loading of coal at railway siding but subsequently by another agreement dated 2.3.2010 it was agreed between the assessee and BECML that all the work of loading and transportation of coal from the colliery pithead stage would be arranged by BECML and the assessee's work in respect of coal extracted from the mines would be restricted upto stacking of coal at pithead only. As per the original agreement dated 22.1.2002, the assessee was to do all the work upto loading at the railway siding and by virtue of the modification agreement, work was truncated whereby right from loading at colliery to pithead everything was to be done by the third party, namely, PANEM, except loading at Pakur Railway siding which was to be done by the assessee. If these were the terms and conditions of the agreement then the circular issued by the Central Board in C.B.E. & C. Letter F. No.233/2/2006-CX.4, dated 12.11.2007 came to the aid of the assessee. The said Circular also came to be issued since certain disputes relating to chargeability of service tax on some of the services provided to mining sector were reported and, accordingly, clarification was issued.
In paragraph 2 of the Circular the Board stated that the mining sector (such as coal mines, mining of ores, etc.) mainly receive the following types of services, mostly on contract basis :-
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(i) Excavation/drilling and removal of the overburdens (i.e. stratum, layer of mud, boulders, etc, that needs to be removed during or prior to extraction of coal/minerals).
(ii) Coal cutting or mineral extraction and lifting them up to the pithead.
(iii) Handling and transportation of coal/mineral from pithead to a specified location within the mine/factory or for transportation outside the mines.
From the above it is clear that handling and transportation of coal/mineral from pithead to a specified location within the mine/factory or for transportation outside the mine was included. Therefore, it is clear that the activity of handling of goods, including of unloading and loading thereof being part of the mining services to be rendered under the agreements entered into by the assessee cannot be bifurcated under different heads for the purpose of demanding service tax. Identical issue was considered by the High Court of Judicature at Allahabad in the case of Commissioner of Central Excise -versus- Manoj Kumar reported in 2015 (40) S.T.R. 35 (All.), wherein it was held that the activity of loading, unloading, packing, unpacking, stacking, re- stacking and shifting of sugar bags from mill floor to godown or from one godown to another godown within the factory is not covered in cargo handling service as there being no activity of loading or unloading for movement outside the factory on public road or ship or aeroplane or trucks for any destination.
The Court noted that in common parlance 'cargo' means load, which is to be carried by ship, aeroplane, rail or truck and handling of transportation of goods, by 7 2025:CHC-OS:69-DB itself unless it is an organized activity, which is connected with carrying cargo is involved would not fall within the definition of cargo handling service.
Similar view was taken by the High Court of Jharkhand at Ranchi in the case of Commissioner of Central Excise, Ranchi -versus- Modi Construction Company reported in 2011 (23) S.T.R. 6 (Jhar.).
In the light of the above reasoning, it has to be necessarily held that the activity of handling of goods including loading and unloading thereof being part of the composite agreement entered into by the assessee with the third parties cannot be bifurcated under different heads for the purpose of demanding service tax.
Therefore, with this reason, the finding of the learned Tribunal is affirmed. In the result, the appeal is partly allowed and the substantial questions of law nos.1 and 2 are answered in favour of the revenue and the substantial question of law no.3 is answered against the revenue.
The application being IA No.GA/2/2025 stands closed.
(T.S SIVAGNANAM) CHIEF JUSTICE I agree.
(CHAITALI CHATTERJEE (DAS), J.) S.Das/S.Pas/MG AR[CR] 8 2025:CHC-OS:69-DB