Sales Tax and Service Tax together cannot be applied on Same Transaction: CESTAT reiterates SC Order [Read Order]

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), reiterated the decision of the Supreme Court and observed that sales tax and service tax together cannot be applied on a same transaction.

The order 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, the appellant in the appeal.

The dispute relates to the period 2014-15 and the appellant asserts that at the time of sale it recovered basic price of the coal, coalsizing 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 this appeal.

Rajeev Kumar Agarwal, Counsel appearing for the appellant stated that the issue involved in this appeal has already been decided by this Tribunal in number of cases and in this connection referred to a decision of the Tribunal rendered on M/s South Easter Coalfield Ltd vs. CCE & S.T., Raipur.

Harshvardhan, Authorised Representative appearing for the department has, however supported the order.

The Tribunal of Justice Dilip Gupta, President and Hemambika R Priya, Technical Member 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 Tribunal relied on the decision of the Supreme Court in Bharat Sanchar Nigam Ltd vs. Union of India, wherein it was held that both sales tax and service tax cannot be made applicable on the same transaction.

To Read the full text of the Order CLICK HERE

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