Top Stories Mineral Transport Within and Outside Mines Falls under GTA for Service Tax, Not Mining: CESTAT [Read Order] The bench noted that the demand raised was based solely on data obtained from the Income Tax department, without any corroborating evidence to substantiate that the amounts received were related to taxable mining services. For this reason, the demand could not be sustained By Navasree A.M – On November 11, 2024 3:16 pm – 4 mins read In a recent ruling, the Ahmedabad bench of Central Excise and Service Tax Appellate Tribunal ( CESTAT ) ruled that the transportation of minerals within the mines or outside the mines fall under the Goods Transportation Agency ( GTA ) for the service tax and not mining.

The tribunal noted the Supreme Court ruling in the case Singh transporters; it was held that transport of coal from pithead to railway siding within the mining area is classifiable under GTA service and not under mining service. Become a PF & ESIC expert with our comprehensive course – Enroll Now The issue involved the matter is whether the activity of the appellant for the period 2009-2010 to 2013-2014 falls under the category of mining service as claimed by the department or transport service as submitted by the appellant and whether the same is liable to payment of service tax.

During the audit, records of M/s. Ashapura International Ltd and M/s. Ashapura Minechem Ltd it was found that they have availed the service of mining, digging of materials from the appellants at their mining site for which they have made payments to the appellant which falls under the category of mining service, however, the appellant had not taken the registration and not paid the service tax. Accordingly, the demand was confirmed and the same was upheld by the Learned Commissioner(Appeals). Therefore, the present appeal filed by the appellant, Roopsangji Samatji Payar. Nilesh Suchak, Chartered Accountant appearing for the appellants submitted that the appellant was a transport contractor and had provided service of transportation of goods to various parties. They have not provided mining service to any party and there is not an iota of evidence on record regarding provisions of mining service.

Become a PF & ESIC expert with our comprehensive course – Enroll Now The appellant argued that transportation services by road, excluding those provided by a goods transport agency ( GTA ), were not subject to taxation until June 20, 2016, under any of the 19 specified categories of taxable services. According to Section 66D(p)(i) of the Finance Act, 1994, services involving the transportation of goods by road—except those offered by a GTA or courier agency—were included in the negative list from July 1, 2012. As such, no service tax could be levied on these services, as per the provisions of Section 66D. Therefore, the confirmation of the service tax demand under mining services was deemed incorrect. The appellant further contended that categorising transportation job revenue as “job work income” does not reclassify it as mining service, merely due to the absence of the term “transportation income.” It provided evidence that payments received for these transportation services were subject to TDS by the service recipient under Section 197C of the Income Tax Act, with this classification shown in Form 26-AS.

Despite this, a service tax demand under mining services was upheld without concrete evidence, based solely on assumptions. Become a PF & ESIC expert with our comprehensive course – Enroll Now The bench reviewed these submissions and observed that the department’s position was that the appellant provided mining services. However, the records, including Form 26-AS, did not contain specific details of the appellant’s activities, and there was no substantial evidence to confirm that mining services were actually provided. Additionally, the bench noted that the appellant’s invoices and accounting records consistently showed that they were engaged as a transport contractor, providing transportation of mined goods, not mining services. The Income Tax 3CD report further confirmed the appellant’s role as a transport contractor, with TDS deductions under Section 197C for transportation. The appellant also cited Circular No. F.No. 232/2/2006-CX.4, dated November 12, 2007, wherein the board clarified that transportation of minerals from pithead to a designated location, whether within or outside a mining site, should be classified as goods transportation by road, subject to service tax under GTA services.

Since the appellant transported minerals using their own vehicles and issued no consignment note, this activity qualified as transportation of goods by road rather than mining services. The bench of Judicial Member Ramesh Nair and Technical Member C L Mahar noted the Supreme Court’s decision in Singh Transporters further supported this view, holding that transporting coal from pithead to railway siding within a mining area falls under GTA services, not mining services. The Tribunal also upheld this stance in Rasleela Enterprises Pvt Ltd, ruling that transportation charges are not covered under mining services. Become a PF & ESIC expert with our comprehensive course – Enroll Now Moreover, the bench noted that the demand raised was based solely on data obtained from the Income Tax department, without any corroborating evidence to substantiate that the amounts received were related to taxable mining services. For this reason, the demand could not be sustained.

This view was also supported by the tribunal’s decision in the case of Maa Kalika Transport Pvt. Ltd., where a similar demand was set aside on both merits and limitation grounds. Accordingly, the bench set aside the service tax demand, ruling that the appellant’s transportation services could not be classified under mining services and that the demand lacked sufficient evidence for support. To Read the full text of the Order CLICK HER