The Kolkata Bench of the CUSTOMS EXCISE AND SERVICE TAX APPELLATE TRIBUNAL (CESTAT) has held that Service Tax is not payable on administrative charges received from coal mine companies by the Coal Mines Provident Fund Organization.
The Bench observed that since there is no service provider and service receipt relationship and in absence of any consideration which condition is a sine qua non as per the definition of �service�, there is no case of rendition of service, much less a taxable service. Coal Mines Provident Fund Organisation is the creature of the statute. The Organisation is governed by the Coal Mines Provident Fund and Miscellaneous Provisions Act, 1948. The preamble of the Act is to frame aprovident fund scheme, pension scheme, deposit link insurance scheme, bonus scheme for the employees of coal mines. The CMPFO is entitled to administrative charges of 3% of the amount payable by the coal mine companies for managing the fund.
The department contended that while recovering the administrative charges, the CMPFO is liable to pay service tax under the category of banking and other financial services under the category �service� under the Finance Act, 1994.
As per the Act, service defines an activity carried out by a person for another for consideration.
The Tribunal held that since there is no consideration involved therefore it cannot be said that any service has been rendered by the CMPFO to the Coal Mine companies.
The question of exemption arise when there is levy, if there is no levy not all, there would be nothing to exempt.
