At, Customs Excise Service Tax Appellate Tribunal Principal Bench New Delhi
By, THE HONORABLE JUSTICE: DR. SATISH CHANDRA
By, PRESIDENT AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
For Petitioner: R.S. Sharma, Advocate And For Respondents: Ranjan Khanna, AR
1. The appeal is against order dated 18-5-2011 of Commissioner (Appeals), Jaipur-II. The appellants are engaged in providing various taxable services and were registered with the department. Certain investigations were carried out by the Central Excise Officers regarding non-payment of service tax by various parties involved the mining work. On completion of the investigation, proceedings were initiated against the appellant for non-payment of service tax of Rs. 7,93,473/- on services namely 'cargo handling'/'site formation and clearance, excavation and earthmoving service', 'earthmoving & demolition' and 'survey and exploration of mineral and mining service'. The period involved is 7-6-2004 to 30-9-2007. The original authority confirmed the service tax demand and imposed equal amount of penalty on the appellant under Section 78 of the Finance Act, 1994. Further, penalties were also imposed on the appellant under Sections 76 and 77 of the Act. On appeal, the Commissioner (Appeals) confirmed the said order. Ld. Counsel for the appellant submitted that in terms of the agreement with the client that they have undertaken the work of prospecting mineral deposit, de-watering of mineral, removal of overburden, raising of china clay exposed after removal of overburden and loading china clay. It is submitted that their activities are not covered by 'either cargo handling service', 'site formation clearance, excavation earthmoving service' or 'survey and exploration mineral survey and oil and gas services'. A combined demand of service tax was confirmed against the appellant without any segregation of the tax liability under various above categories. The appellant undertook, mining service which is liable to tax only w.e.f. 1-6-2007. There is no service tax liability on the appellant prior to that date.
2. He relied on certain decided cases in support of his argument.
3. Ld. AR reiterated the findings of the lower authorities.
4. We have heard both the sides and perused appeal records.
5. We note the proceedings against the appellant were in respect of services rendered, the scope of which has already mentioned. A plain reading of the services will indicate that these are relating to mining as defined under Section 65(105)(zzzy). Further, we also note that different categories of services were mentioned by the lower authorities to confirm the tax liability against the appellant. No segregation as to the quantum of tax liability under each categories of taxable service has been given. We also note that the scope of service rendered by the appellant has been applied to tax under various tax entries. The combined scope of services under a single contract was treated for tax liability under different headings without due legal justification. We note that the Tribunal in Thriveni Earth Movers v. CCE, Salem : 2009 (15) S.T.R. 393 (Tri.-Chen.) observed that movement of limestone and rejects in the mining is covered by the entry mining of mineral oil gas and cannot be taxed under 'cargo handling service' prior to 1-6-2007. It was also recorded that when an activity was brought under the service tax net w.e.f. a particular date the same activity cannot be subjected to tax under a pre-existing tax entry, unless the scope of pre-existing categories of services is simultaneously modified. In CCE, Hyderabad v. Vijay Leasing Company : 2011 (22) S.T.R. 553 (Tri.-Bang.) it was held that activity of site formation etc. is incidental to mining of ore undertaken and the same cannot be taxed prior to 1-6-2007. Reference can also be made to the decision of the Tribunal vide Final Order No. 50662/2014, dated 21-2-2014 in the case of National Construction Company v. CCE, Jaipur [2014 (34) S.T.R. 739 (Tri.-Del.)] wherein the Tribunal held that when the activity of the appellant is accepted as mining service by the department w.e.f. 1-6-2007, for the period prior to that date the same activity cannot be classified as site formation and clearance, excavation and earth moving or cargo handling service. We are informed by the ld. Counsel for the appellant that after the introduction of tax entry for 'mining service' the appellant were registered with the department and were discharging service tax applicable.
6. Having examined the scope of work undertaken by the appellant as mentioned in the show cause notice, we find that the same is co
Please Login To View The Full Judgment!
vered under the tax entry under Section 65(105)(zzzy) of the Finance Act, 1994. The clarification dated 28-2-2007 issued by CBEC states that mining service covers cite formation and clearance, excavation and earth moving and various outsourced activities provided for mining. In view of the factual and legal position as discussed above and referring to various decided cases, we find that the impugned order is not legally sustainable. The same is set-aside. The appeal is allowed.