2013 (3) TMI 355 - AT - Service Tax

Classification of Services - Composite services - excavation, picking, sorting, breaking, sizing and stacking, loading of iron ore into trucks, transporting to screening plant or railway siding, loading of ore into BG wagons at railway sidings and removal of rejects etc. - mining service versus Business Auxiliary Service - period 2005-06 - Held that - guideline laid down by the Board s Circular and as per the provision of Section 65A, the classification of service under composite contract is appropriately classifiable under mining service. The said mining services were not taxable services during the relevant period. The Revenue is trying to divide the contract which is not the case in the show-cause notice. - Therefore, division contract cannot be permitted at this stage and the grounds taken by the Revenue in their appeal are beyond the purview of show-cause notice. - Decided in favor of assessee.

Summary

Issues: Revenue's appeal against dropping of show-cause notice for demand of service tax under Business Auxiliary Service.

Analysis:
1. Facts of the Case: The case involved allegations against a company for not discharging service tax liability under Business Auxiliary Service for activities related to mining services provided to another company.

2. Revenue's Argument: The Revenue contended that the activities undertaken by the company fell under taxable services, including cargo handling and goods transportation, and thus, service tax was due on the entire amount.

3. Respondent's Argument: The respondent argued that the activities were covered under a composite contract mainly classified under mining services, not Business Auxiliary Services, as clarified by relevant provisions of the Finance Act and Board's Circular.

4. Judgment: The Tribunal examined the activities undertaken by the company and found them more appropriately classified under mining services than Business Auxiliary Service. Citing the Board's Circular and Section 65A of the Finance Act, the Tribunal emphasized the need to determine the essential character of the service provided. It noted that the Revenue's attempt to divide the contract was beyond the show-cause notice's scope.

5. Legal Clarifications: The Tribunal referenced the Board's Circular, which outlined guidelines for classifying taxable services under composite contracts. It also highlighted Section 65A, which specifies the classification of taxable services and the preference for more specific descriptions over general ones.

6. Conclusion: The Tribunal upheld the impugned order, dismissing the Revenue's appeal as the activities were correctly classified under mining services, which were not taxable during the relevant period. It rejected the Revenue's attempt to divide the contract and found no infirmity in the order. The cross objection was also disposed of accordingly.