Applicability Of Indirect Taxation On Coal Mining

Clarifications required from the client to advise on the applicability of excise, service tax & VAT on mining of coal on behalf of NTPC, BCCL etc. 1) Whether any process will be undertaken on the coal after mining by our client. A flow chart of processes to be undertaken for mining of the coal will be helpful in understanding the implication of Excise, Service Tax as well as VAT liability. 2) Service tax is applicable under the category of “Business Auxiliary Service” for Production and processing of goods for, on behalf of the client. A understanding of mining process will enable us to determine the applicability of service tax or otherwise. 3) Whether the raw coal mined will be sold as such by the owner of the mines or it will be used for coke making or beneficiation to a coal washery. This is necessary to understand the stage at which excise duty will be payable under The Coal Mines (Conservation and Development) ACT, 1974 (No. 28 of 1974). An excise duty not exceeding Rupees Ten per tone is leviable on all coal raised and dispatched, and on all coke manufactured and dispatched, from the collieries in India. 4) Service tax is applicable on consignor or consignee who pays the freight for transportation of goods by road. We need information regarding who will pay the freight and how inward and outward transportation will take place from mines. 5) Whether any materials will be consumed in mining. This information is necessary to understand the liability of Works Contract Tax, if any, under Value Added Tax. 6) A copy of format of Bill to be raised on NTPC, BCCL etc to have an overall view of the nature of transaction.