2010 (12) TMI 782 - AT - Service Tax

Refund calim - The respondents were engaged in providing services of mining to their clients/principals. With introduction of separate service under the category of mining service w.e.f. 1-6-2007, the respondents were of the view that their service would fall under the new category and the service tax paid by them was not statutorily required to be paid - Accordingly, they preferred a refund claim for an amount of Rs. 1,58,11,007/- the learned Counsel for the appellant has invited our attention to Annex. 4, another order of the same authority, being Commissioner dated 30th September 2005, passed in the case of the assessee itself, for the subsequent period April 2000 to March 2002, wherein it has clearly been held, that all these services as cataloged in the said order are not chargeable to service tax. And consequently the proceedings initiated against the assessee, wherein the adjudicating authority had demanded tax, were set aside, and the proceedings were dropped. It is not shown, that this order dated 30-9-2005 has, at all been appealed against, nor has it otherwise been shown to be wrong. In that view of the matter, the reasonings given by the learned Commissioner, in the order Annex. 2, also cannot sustain

Issues Involved:
1. Classification of services provided by the respondents.
2. Entitlement to a refund of service tax paid under self-assessment.

Detailed Analysis:

1. Classification of Services Provided by the Respondents:

The primary issue in this case revolves around the classification of services provided by the respondents. The respondents were registered under the category of "Site formation and clearance, excavation and earthmoving and demolition" services and paid service tax accordingly for the period from 16-6-2005 to 30-9-2006. They later contended that their services should fall under the newly introduced category of mining services, which became effective from 1-6-2007. Consequently, they claimed a refund of Rs. 1,58,11,007/- for the service tax paid.

The Revenue argued, based on CBEC's circular dated 12-11-2007, that activities such as excavation, drilling, and removal of overburdens in mines were covered under the "Site formation and clearance, excavation and earthmoving and demolition" services. They maintained that the contracts entered by the respondents included these activities, and hence, the service tax was correctly paid under the initial category.

The respondents, however, highlighted that their contracts primarily involved the extraction of iron ore, with incidental activities like excavation and site formation. They referred to the Tribunal's decision in M. Ramakrishna Reddy v. CCE&C, Tirupathi, which held that removal of overburdens and excavation of ore fell under mining services, taxable from 1-6-2007.

The Commissioner (Appeals) found that the respondents were engaged in "Winning the minerals," and the incidental activities did not alter the primary nature of their service, which was mining. The Tribunal agreed with this finding, noting that the Revenue did not challenge these factual findings. Thus, it was concluded that the respondents' activities during the relevant period were not taxable under "Site formation and clearance, excavation and earthmoving and demolition" services but under mining services, effective from 1-6-2007.

2. Entitlement to a Refund of Service Tax Paid Under Self-Assessment:

The second issue concerned the respondents' entitlement to a refund of service tax paid under self-assessment. The Revenue argued that since the respondents had self-assessed and paid the service tax, they could not claim a refund without challenging the assessment. They cited Tribunal decisions in KEC International Ltd. v. CCE, Jaipur-I and CCE, Chennai v. EID Parry India Ltd., which held that amounts paid on self-assessment were not refundable.

The respondents countered by citing the Hon'ble High Court of Rajasthan's decision in Central Office Mewar Palaces Org. v. UOI, which clarified that self-assessment does not equate to an assessment by an officer and does not preclude a refund claim. The Tribunal concurred with this view, noting that the self-assessment by the respondents did not bar them from claiming a refund once they realized their services were taxable under a different category from 1-6-2007.

The Tribunal found that the High Court's judgment settled the issue in favor of the respondents, making the Revenue's reliance on previous Tribunal decisions inconsequential. Therefore, the Tribunal upheld the Commissioner (Appeals)'s decision to allow the refund claim, deeming it correct, proper, and legal.

Conclusion:

The appeal filed by the Revenue was rejected, affirming the respondents' classification of services under mining services and their entitlement to a refund of the service tax paid under self-assessment. The Tribunal's decision reinforced the principle that self-assessment does not preclude the possibility of a refund if it is later determined that the tax was not statutorily required.

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