CESTAT set aside the order passed by the respondent and held that service tax is not payable on administrative charges received from coal mine companies by the Coal Mines Provident Fund Organisation.

Brief Facts:

The appellant is a creature of the statute and is governed by Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948, which makes provisions for framing a provident fund scheme, a pension scheme, a deposit link insurance scheme and a bonus scheme for persons employed in coal mines and the appellant to undertake these functions is entitled to recover administrative charges at the rate of 3% of the amount payable by the coal mine companies for managing the fund under the provisions of CMPF & MP Act. The department contended that by recovering the said administrative charges, the Appellant is liable to pay service tax under the category of Banking and other Financial Services and the category of ‘Service’ when the negative list of services was introduced under the Finance Act, 1994.

Contentions of the Respondent:

The learned authorized representative appearing for the respondent argued that since there is no specific exemption prescribed in the Mega Exemption Notification and no exclusion has been made in the negative list of services, the demand is liable to be sustained during the period covered in the negative list of services.

Observations of the Court:

The tribunal observed that the term ‘service’ is defined under Section 65B(44) of the Finance Act, 1994, to “mean an activity carried out by a person for another for consideration” and since there is no consideration involved in the present case, it cannot be said that any service has been rendered by the Appellant to the coal mine companies.

The tribunal relied on the judgment of the Supreme Court in Peekay Re-Rolling Mills (P) Ltd. vs Assistant Commissioner which held that the question of exemption shall arise only when there is a levy and if there is no levy at all, there would be nothing to exempt. It was further stated that since there is no service provider-service recipient relationship in the present case and the absence of ‘consideration’ which condition is a sine quo non as per the definition of service, there is no case of rendition of service much less a ‘taxable service’ and thus, the need to examine the applicability of the exemption notification does not arise.

The decision of the Court:

The appeal was allowed and the impugned order was set aside.

Case Title: Coal Mines Provident Fund Organisation vs. The Commissioner of Central Excise & Service Tax

Coram: Hon’ble Mr. P.K Choudhary Member (Judicial) and Hon’ble Mr. K. Anpazhakan, Member (Technical)

Case No.: Service Tax Appeal No. 75540 of 2015

Advocate for the Applicant: Mr. Sanjay Dixit

Advocate for the Respondent: Mr. J. Chattopadhyay

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Kritika