2013 (12) TMI 101 - AT - Service Tax

Waiver of pre deposit - Drilling and blasting - Whether drilling and blasting would constitute dredging services - Held that - applicants had not produced any work order to show the scope of work. The only contention of the applicants is that the applicants had taken the process of drilling and blasting. Dredging service includes removal of material. As the drilling and blasting essentially result in removal of material, therefore, we find that, prima facie, the applicants had not made out a case for total waiver of the dues - Conditional stay granted.

Summary

Issues involved:
1. Waiver of service tax, interest, and penalty for undertaking drilling and blasting activity classified under dredging services.
2. Interpretation of the definition of dredging service under Sec. 65(36a) of the Finance Act.
3. Submission of work order to determine the scope of work undertaken by the applicants.

Analysis:
The judgment revolves around the application for waiver of service tax, interest, and penalty amounting to Rs. 12,75,866/- by the applicants who had undertaken drilling and blasting activity, categorized under dredging services. The contention of the applicants was that they had carried out drilling and blasting solely as directed by the main contractor and had not engaged in dredging activities. They relied on a letter from Reliance & Machine Joint Venture to support their claim. On the other hand, the Revenue argued that drilling and blasting fall under dredging services as per the Finance Act and that the applicants failed to provide a work order detailing the scope of work undertaken (para 2-4).

The Tribunal analyzed the definition of dredging service under Sec. 65(36a) of the Finance Act, which includes the removal of various materials from rivers, ports, harbors, etc. The applicants' defense was centered on the fact that they had conducted drilling and blasting at a river site, emphasizing that it did not constitute dredging. However, as drilling and blasting inherently involve material removal, the Tribunal found that the applicants had not sufficiently proven their case for a complete waiver of dues. Consequently, the Tribunal directed the applicants to deposit Rs. 4 lakhs within eighty weeks, with the remaining amount of dues waived upon this deposit, and recovery stayed during the appeal's pendency (para 5-7).

The crucial aspect of the judgment was the absence of a work order provided by the applicants to clarify the scope of work undertaken. Despite the lack of a detailed work order, the Tribunal's decision was based on the interpretation of the activities undertaken by the applicants in relation to the definition of dredging service. The judgment highlights the importance of substantiating claims with appropriate documentation and the significance of aligning activities with the legal definitions to determine tax liabilities accurately. Compliance with the Tribunal's directives was set for a specific date to ensure timely reporting (para 7 ).