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2018 (7) TMI 1919 - AT - Service TaxBusiness Auxiliary Services - Cargo Handling Services - assessee engaged in various activities/job such as raising, sorting, picking of iron ore at the mining site, loading the ores on dumper and transporting the same to the desired destination and unloading the same and hiring of HEMM for removal of mining rejects by mechanized operation at Thakurani Mines - HELD THAT - Division Bench of Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE SERVICE TAX, BBSR-II VERSUS M/S THRIVENI EARTHMOVERS (P) LTD. (VICE-VERSA) 2018 (11) TMI 31 - CESTAT KOLKATA has held that Vivisecting the composite contract and charging service tax on different components of the contract individually under different services is not justified. The Tribunal in the case of M/S. HAZARIBAGH MINING ENGINEERS PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS SERVICE TAX, BBSR-I 2016 (12) TMI 1131 - CESTAT, KOLKATA have considered a similar composite mining contract which was made chargeable to service tax under different categories. The Tribunal held that once the contract is a composite contract for the entire activities from site formation to segregation of ores then the same has to be charged as a separate service (Mining Services), which was made chargeable to service tax w.e.f 01.06.2007 only. Vivisecting the composite contract and charging service tax on different components of the contract individually under different services is not justified - appeal dismissed - decided against Revenue.
Issues:
Classification of services for service tax liability under "Business Auxiliary Services" and "Cargo Handling Services." Analysis: The case involved a dispute regarding the classification of services provided by the assessee for service tax purposes under the categories of "Business Auxiliary Services" and "Cargo Handling Services." The Adjudicating Authority had confirmed the demand for Service Tax, interest, and penalties, which was later set aside by the Ld. Commissioner (Appeals). The Revenue appealed before the Tribunal against the appellate order. Upon perusal of the appeal records, it was noted that the Lower Appellate Authority had extensively discussed the issue and passed a detailed order. The key contention was that the services provided by the assessee, including mining and transportation of ore, were initially under a composite contract but later bifurcated into separate services with distinct rates. The issue revolved around the classification of these services and the applicability of service tax. The Tribunal, after considering the arguments presented, held that the services related to mining activities could not be classified as Business Auxiliary Services during the relevant period. The classification under Business Auxiliary Services did not encompass mining activities, as evidenced by the separate classification provided for mining services in 2007. Therefore, the services related to mining were liable to service tax only from 01.06.2007 under the category of mining services. Regarding the transportation of ore from the mine to the factory, the Tribunal found that the services were incorrectly classified as Cargo Handling Services. The absence of evidence supporting the classification, such as separate handling charges or explicit mention of loading/unloading activities in the contract, led to the conclusion that the services should be classified under goods transport services. The Tribunal emphasized the importance of proper classification based on contractual terms and supporting evidence. Additionally, the Tribunal referred to previous decisions where composite contracts involving mining activities were treated as a single service for service tax purposes, rather than dissecting them into separate taxable components. The Tribunal highlighted the need to consider the entire scope of the contract to determine the appropriate classification for service tax liability. In light of the above analysis and precedents, the Tribunal upheld the decision of the Lower Appellate Authority, setting aside the demand for service tax and penalties. The appeal filed by the Revenue was rejected, affirming the classification of services under mining and goods transport categories for service tax purposes.
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