2013 (12) TMI 1178 - AT - Service Tax

Stay application - Classification of service - Whether the drilling services could be classified under mining services for the period from 1.6.2007 and/or under site formation services for the prior period - Held that - drilling for the purpose of mining is not encompassed by the definition of site formation service but the same can prima facie be considered as an activity integrally connected with mining services . It is not in dispute that the appellant did not pay service tax under the head mining services for the period from 1.6.2007 to 13.3.2009 - appellant was eligible for SSI benefit for the said period and hence their tax liability, if any, under mining services would be around Rs.1.2 lakhs only. If that be so, in our view, the appellant should have paid such tax with interest for the period from 1.6.2007 to 13.3.2009 - Prima facie case not in favour of assessee - Stay granted partly.

Summary

Issues:
1. Waiver and stay against adjudged dues for service tax and education cesses.
2. Classification of drilling services under 'mining services' or 'site formation services'.
3. Eligibility for SSI benefit and tax liability under 'mining services'.
4. Business impact post Supreme Court orders and time-bar plea against demand.

Analysis:
1. The appellant sought waiver and stay against the adjudged dues, including service tax and education cesses for specific services provided. The appellant argued they were only supplying drilling machines and not liable for service tax. The Deputy Commissioner contended that the drilling services provided were integral to mining operations and should be classified under 'mining services' for a certain period and 'site formation services' for another. The Tribunal found substance in the Deputy Commissioner's submissions, especially considering the statements of the individual involved in the business operations.

2. The Tribunal analyzed whether drilling services could be categorized under 'mining services' or 'site formation services' based on the definitions of the taxable services. It was concluded that drilling for mining purposes did not fall under 'site formation services' but could be considered connected to 'mining services'. The appellant had not paid service tax under 'mining services' for a specific period, and it was noted that they might be eligible for Small Scale Industry (SSI) benefit, reducing their tax liability under 'mining services'.

3. The appellant claimed a lack of business in a specific mining area post Supreme Court orders and raised a time-bar plea against part of the demand. The Tribunal stated these claims needed further substantiation. As a result, the Tribunal directed the appellant to pre-deposit a specified amount and report compliance within a set timeframe. Subject to this compliance, waiver and stay were granted for the remaining dues.

4. The judgment highlighted the need for the appellant to fulfill the pre-deposit requirement and report compliance within the specified timeline. The decision on waiver and stay was contingent upon this compliance, emphasizing the importance of meeting the Tribunal's directives for further consideration of the appellant's claims and liabilities.