2006 (5) TMI 467 - AT - Service Tax

Summary

Issues:
1. Taxability of services rendered by the appellants prior to June 1, 2007.
2. Levy of interest and penalty on the appellants.
3. Interpretation of the scope of services falling under "site formation and clearance, excavation and earthmoving and demolition services."
4. Calculation of tax liability and interest amount.

Analysis:

1. The issue of taxability of services rendered by the appellants prior to June 1, 2007 was raised in the appeal. The appellants argued that since the services provided by them were in the nature of mining services, which were brought under the service tax net from June 1, 2007, the services rendered before this date should not be taxable. However, the Adjudicating Commissioner confirmed the service tax demand based on the category of services falling under "site formation and clearance, excavation and earthmoving and demolition services."

2. The appellants did not contest the tax amount as it had been reimbursed to them by their clients. They challenged the levy of interest and penalty. The Tribunal noted that the tax liability was not being disputed by the appellants, and hence, the interest liability was upheld. However, considering the disputed nature of the service and the interpretation of the service scope, the Tribunal decided to waive the penalty under section 80 of the Finance Act, 1994. The appellants had taken steps to obtain clarification regarding the taxability of the service, and the tax amount was reimbursed by their public sector clients.

3. The Tribunal examined the definition of the impugned service under clause 105(zzza) of section 65 of the Finance Act, 1994. It was observed that activities such as extraction for geological purposes, drilling, soil stabilization, etc., were part of the works undertaken by the appellants in the process of coal extraction. The Tribunal acknowledged that the Adjudicating Commissioner had passed a detailed order with reference to the work done by the appellants and the definition of the service in question.

4. Lastly, the appellants contended that there was a clerical error in computing the tax liability. They argued that the correct amount should be Rs. 1,43,43,111 instead of the demanded amount of Rs. 1,54,71,961. The Tribunal, upon hearing both sides, remanded the matter to the original authority for rectifying any calculation mistakes and for the correct calculation of the interest amount. The appeal was partly allowed by setting aside the penalty amount while confirming the demand for tax and interest.