2007 (7) TMI 95 - AT - Service Tax

Services of breaking large size dolomite to smaller sizes by way of crushing, thereafter grading into different sizes for transportation to the plant. There is no mining only transportation of goods - Appellant have strong case in their favour and pre-deposit of service tax and penalties waived

Summary

Issues:
1. Whether the applicant qualifies as a cargo handling agent for the purpose of service tax.
2. Whether the transportation of dolomite by the applicant is considered incidental to their main mining contract with SAIL.
3. Whether the applicant's activities fall under the definition of cargo handling service as per relevant legal provisions.
4. Whether the applicant is liable to pay service tax as a mining contractor.

Analysis:
1. The applicant contended that they are a mining contractor for SAIL and that their contract involves breaking and crushing dolomite, with transportation being incidental. They argued that cargo handling services are limited to handling goods only, not transportation. They cited dictionary definitions and a court decision to support their position. The Tribunal noted that the applicant is indeed a mining contractor, not solely a cargo handling agent, and that their activities go beyond mere transportation.

2. The revenue argued that the applicant is primarily a cargo handling agent, citing circulars and a previous case where a similar situation was deemed as cargo handling service. However, the Tribunal found that the applicant's role as a mining contractor for dolomite processing distinguishes them from a typical cargo handling agent, as their services involve more than just handling goods.

3. The Tribunal observed that the applicant's contract with SAIL was for mining services, which were brought under the scope of service tax from a certain date. The revenue's reliance on a previous case involving transportation without mining was deemed irrelevant. Considering the Board circular defining cargo handling services, the Tribunal found in favor of the applicant, stating that they have a strong case.

4. Based on the above analysis and the Board circular defining the scope of service, the Tribunal ruled in favor of the applicant, waiving the pre-deposit of service tax and penalties. The recovery of dues was stayed pending the appeal's disposal, indicating that the applicant is not liable to pay service tax as a mining contractor until the matter is resolved.

In conclusion, the Tribunal's decision favored the applicant, recognizing their role as a mining contractor rather than a cargo handling agent, and granting relief from the service tax and penalties pending the appeal's outcome.