2013 (12) TMI 203 - AT - Service Tax

Stay application - Demand of service tax - Site Formation services - Mining services - Held that - On perusal of the contract which has been treated as covering activities of mining services, we find that the same relate to activities of quarrying in rocks by drilling and blasting of rocks and recovery of stones and like materials for the purpose of laying roads and building port. This, in our view, may not fall under the category of mining services - However, the other activities prima facie fall under site formation services. The appellant is claiming that some of the main contractors have paid service tax on the whole value. However, ld. Chartered Accountant is not able to give exact details relating to payment of service tax by the main contractors. Therefore, we hold that the applicant has not made out a case for full waiver of the dues as per the impugned order in this regard - Conditional stay granted.

Summary

Issues:
1. Stay petition for waiver of pre-deposit of service tax demand.
2. Sustainability of demand under "Mining services" and "Site formation services".
3. Claim of undue hardship by the appellant.
4. Consideration of submissions from both sides.
5. Decision on the waiver of pre-deposit and stay of recovery.

Analysis:
1. The appellant filed a stay petition seeking a waiver of pre-deposit of service tax demand amounting to Rs. 79,68,670, comprising two components: Rs. 30,42,787 for "Site Formation services" and Rs. 49,25,883 for "Mining services," along with interest and penalties.

2. The appellant's Chartered Accountant argued that the demand for "Mining services" was unsustainable as their activities involved quarrying stones for construction purposes, not mining. Regarding "Site formation services," it was claimed that main contractors had already paid service tax on the entire value, but specific details were lacking.

3. The appellant contended that pre-deposit would cause undue hardship, citing a nominal profit of Rs. 2 lakhs as per the balance sheet ending March 31, 2011.

4. The Joint Commissioner reiterated the findings of the Commissioner, supporting the demand for service tax.

5. After considering submissions and contract details, the Tribunal found that the activities related to quarrying stones for construction did not strictly fall under "Mining services." However, it was unclear if main contractors had paid service tax on the full value, leading to a denial of full waiver. The appellant was directed to deposit an additional Rs. 10 lakhs within eight weeks, with a compliance report due by January 17, 2012. Upon this deposit, the pre-deposit of the remaining dues was waived, and recovery stayed pending appeal disposal.