No Service Tax on Administrative Charges received by Coal Mines Provident Fund Organization in Absence of Service Provider-Service Recipient Relationship & Consideration: CESTAT

The Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), Kolkata, has held that there is no Service Tax implication on the Administrative Charges received by the Coal Mines Provident Fund Organization (CMPFO) in the absence of Service Provider-Service Recipient Relationship & Consideration.

The CMPFO is an organization operating under the Coal Mines Provident Fund and Miscellaneous Provisions Act, of 1948, responsible for managing various schemes for employees working in coal mines.

The appeal was filed by CMPFO, represented by Shri Sanjay Dixit, CA against the order passed by the Commissioner of Central Excise and Service Tax, Dhanbad, demanding service tax on the administrative charges received by it from coal mine companies.

The revenue represented by Shri J. Chattopadhyay argued that the demand should be sustained as there is no specific exemption prescribed in the Mega Exemption Notification and no exclusion in the negative list of services.

The bench observed that the administrative charges cannot be considered as “consideration” under the definition of service in the hands of the assessee.

The bench clarified that since there is no consideration involved and no existence of a service provider-service recipient relationship, there is no applicability of service or taxable service.

The bench rejected the Revenue’s argument that the lack of specific exemptions or exclusions in the relevant notifications justified sustaining the demand for service tax.

The bench also considered the recent adjudication order passed by the Additional Commissioner, CGST, Dhanbad in the assessee’s case wherein the demand for Goods and Services Tax (GST) on the administrative charges was set aside.

The bench also noted that the Central Board of Indirect Taxes and Customs (CBIC) had accepted earlier orders of the bench in favour of CMPFO and had chosen not to file a further appeal before the Supreme Court.

The two-member bench consisting ofShri P.K. Choudhary (Judicial Member) and Shri K. Anpazhakan (Technical Member), while providing clarity on the service tax implication of administrative charges collected under the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, set aside the order and allowed the appeal with consequential relief as per law.

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