2018 (7) TMI 1942 - AT - Service Tax

Classification of services - site preparation services or mining services? - appellants entered into an agreement with M/s Bisra Stone Lime Company Ltd. on 13.11.2001 for the purposes of raising of limestone - HELD THAT - The agreed composite rate as per the agreement between both the parties to the contract for all the activities done by the appellants and no separate break-up is available either in the contract or in the bills raised. In view of the facts on record, it cannot be said that the appellant is mainly undertaking site preparation and not the activities relating to mining of limestone is done. It can also not be said that the site preparation is the essential character of the composite services rendered by the appellants. Service tax on site preparation services can be levied if there is a service contract simplicitor to that effect. However, once the contract is a composite contract for the entire activities from site formation to segregation to boulders then the same has to be charged as a separate service under the category of mining services , which was made chargeable to service tax w.e.f. 01.06.2007. Such operation under a composite contract cannot be treated as site formation before 01.06.2007. Appeal allowed decided in favor of appellant.

Summary

Issues involved:
1. Whether the activities undertaken by the appellant amount to providing "mining services" or "site preparation services" for the period before 01.06.2007.

Analysis:
1. The appellant, registered under Service Tax as a provider of "site preparation services," entered into an agreement with a company for raising limestone. A show-cause notice was issued demanding service tax for services rendered. The adjudicating authority confirmed the demand, imposing penalties.

2. On appeal, the Commissioner upheld the order. The appellant argued that the activities fall under "mining services" and not "site preparation services," citing a Tribunal decision. The Revenue supported the impugned order.

3. The main issue was whether the appellant's activities constituted "mining services" or "site preparation services" before 01.06.2007 when "mining services" were brought under the service tax net. The appellant contended that their activities collectively constituted "mining services" from 01.06.2007 and no service tax was due before that date.

4. The Tribunal noted that the contract included various activities beyond site preparation, like extraction and segregation of ore. The agreed rate covered all activities, making it unclear if site preparation was the main service. The Tribunal held that service tax on mining activities was applicable before 01.06.2007, and a composite contract should be charged as "mining services" post that date.

5. The Tribunal allowed the appeal, setting aside the impugned order, as the appellant's services did not solely fall under "site preparation services" before 01.06.2007. The decision was based on the nature of the contract and the activities performed by the appellant.

6. The appeal was allowed with consequential relief, emphasizing that a composite contract covering various activities should be charged separately as "mining services" post 01.06.2007, rather than as "site preparation services."