2013 (6) TMI 444 - AT - Service Tax

Mining services / activities - composite contract - effective date of levy - stay - Held that - The contract is mostly in relation to mining activities and transportation of goods within the mines or within a factory though it appears that there is some activity relating to loading of coal in railway wagons and unloading of coal from railway wagons at which stage the goods may be considered as cargo . But we have not been able to find any separate amounts charged for such loading of cargo in railway wagons unlike the facts in the case of Gajanand Agarwal (2008 (6) TMI 163 - CESTAT KOLKATA). Prima facie it appears to us that the activities were related to mining and transportation of goods within a mine or a factory. - it appears that for transportation activities service tax is also being discharged by the recipient of the service as per legal provisions in this regard. In the case of activities sought to be classified under site formation service our prima facie view is that this activity is classifiable as mining activity and liable to service tax only from 1-6-2007 and such tax is being paid. - Prima facie case in favor of assessee - Stay granted.

Summary

Issues:
Classification of services under 'cargo handling service' and 'Site Formation and Clearance Excavation and Earth Moving Services'; Liability of service tax for services provided; Prima facie view on waiver of pre-deposit of dues for admission of appeal.

Analysis:

1. Classification of Services:
The appellants provided various services to different clients, including transportation of coal, manual breaking of coal, transportation of fly ash, unloading of coal rakes, and preparation of mining sites. The Revenue contended that these services fell under 'cargo handling service' and 'Site Formation and Clearance Excavation and Earth Moving Services,' demanding unpaid service tax. The Tribunal previously remanded the matter for a fresh adjudication. The total amount confirmed was approximately Rs. 15.86 crore for Cargo Handling Service and Rs. 0.29 crores for Site Formation Service for both periods combined.

2. Liability of Service Tax:
The main argument by the appellant was that their activities in mining areas should be classified under mining services taxable from 1-6-2007, for which they registered on 13-9-2007. They contended that transportation within mines or factories did not fall under 'cargo handling service' as goods were not considered 'cargo' at that stage. They cited court decisions to support their stance. The Revenue argued that the services were covered under site formation services and that handling coal within mines and at railway stations warranted service tax. The Tribunal observed that the activities primarily related to mining and transportation within mines or factories, with no separate charges for loading goods onto railway wagons. It was noted that transportation service tax was being paid by the recipients, and the classification as cargo handling service was not warranted.

3. Prima Facie View on Waiver of Pre-deposit:
Regarding the activities classified under site formation services, the Tribunal opined that they were akin to mining activities and taxable from 1-6-2007, with taxes being paid. The demand for service tax under site formation services was deemed not prima facie maintainable as the activity was not specifically covered during the relevant period. Consequently, the appellants were granted a waiver on the collection of dues during the appeal's pendency, considering a strong case made for it.

In conclusion, the Tribunal found in favor of the appellants, ruling against the classification of services under cargo handling and site formation services as contended by the Revenue. The waiver on pre-deposit of dues was granted during the appeal process, acknowledging the appellant's arguments and legal compliance with service tax liabilities.