2016 (11) TMI 516 - AT - Service Tax

Levy of service tax - scope of circular no. B1/6/2005 TRU - cleaning activity service - disposal of fly ash emerging from thermal power plants - transportation of goods by road service - site formation and clearance, excavation and earth moving and demolition service - goods transport agency service - clearing agency service - Held that - The evacuation involves transfer by the pipe-lines in slurry form and allowing the ash to be deposited in the designated area with the water to be drained out thereafter. With the visit of the first appellate authority, the felicity of an elaborate description of the structure in the impugned order for a clearer insight into the issue is gratefully acknowledged. The aim and purpose of the taxable entry, evident from the circular supra, was to tax the activity rendered by providers ahead of another activity on the said land. Land is used for construction of buildings or facilities or is exploited for agriculture and mining. To the extent that some of these uses are to be encouraged, even at the cost of foregoing tax, in the larger interests of societal needs, the statute itself provides exclusion. The claim of the assessee that the circular supra suffices to limit the scope of tax does not stand the test of the statutory intent. The circular merely exemplifies the scheme of the tax entry. Whether the services have been rendered to the project proprietor by the assessee? - Held that - We are unable to fault the finding of the first appellate authority that the site being handed over to the assessee for raising of the height of the ash bund which is the subject matter of the contract, the clearance and excavation work is in relation to that activity and hence rendered to themselves. Had that portion of the work been executed by another person, the tax liability would devolve on that person for having rendered service to the assessee and not upon the assessee. Revenue, in its appeal, appears to have confused the construction work for site formation and excavation and has confounded it further by presuming that even such work as is covered by the definition has been rendered to the power plant by being the project proprietor. Persons, in the context of levy of service tax, have to be identified in accordance with the specific service rendered. Appeal dismissed - decided against Revenue.

Issues:
1. Taxability of services rendered to M/s Nasik Thermal Power Station by M/s B M Chapalkar & Sons
2. Registration for different services under the Finance Act, 1994
3. Demand confirmation by the original authority and penalties imposed
4. Appeal against penalties and demand by M/s B M Chapalkar & Sons
5. Disputed demand, interest, and penalty set aside by Commissioner of Central Excise & Customs (Appeals)
6. Applicability of reduced penalty under section 78 of Finance Act, 1994
7. Nature of services rendered for raising the height of the 'ash bund'
8. Interpretation of the definition of 'site formation and clearance, excavation and earthmoving and demolition' service under section 65(105)(zzza) of Finance Act, 1994
9. Taxability of activities related to raising the height of the 'ash bund'
10. Interpretation of circulars and statutory provisions related to taxable services
11. Analysis of services provided and tax liability
12. Identification of service provider and tax liability

Analysis:

1. The dispute revolves around the taxability of services provided by M/s B M Chapalkar & Sons to M/s Nasik Thermal Power Station. The services in question include cleaning activity service, transportation of goods by road service, and site formation and clearance, excavation, and demolition service, all taxable under specific sections of the Finance Act, 1994.

2. The issue of registration for different services under the Finance Act arises as the appellant had registered only for 'goods transport agency service' and 'clearing agency service' after being pointed out by tax authorities, despite providing multiple taxable services.

3. The original authority confirmed the demand for tax on the mentioned services and imposed penalties under relevant sections of the Finance Act, 1994. The appellant contested the taxability and penalties, leading to further appeals.

4. The appellant appealed against the penalties imposed and sought clarification regarding the option of paying reduced penalty as per section 78 of the Finance Act, 1994. The tribunal dismissed the appeal, stating that the appellant was eligible for the reduced penalty if the conditions were met.

5. The Commissioner of Central Excise & Customs (Appeals) set aside the disputed demand, interest, and penalties but upheld penalties related to other services. Both parties contested the decision, leading to further arguments before the tribunal.

6. The tribunal analyzed the applicability of the reduced penalty under section 78 of the Finance Act, 1994, and concluded that the appellant was not denied access to the privilege, as compliance with the conditions was necessary for availing the reduced penalty.

7. The nature of services rendered for raising the height of the 'ash bund' was a crucial point of contention. The tribunal considered the activities involved in the construction work and their relation to taxable services under the Finance Act, 1994.

8. The interpretation of the definition of 'site formation and clearance, excavation and earthmoving and demolition' service under section 65(105)(zzza) of the Finance Act, 1994, was essential in determining the taxability of the activities related to raising the height of the 'ash bund.'

9. The tribunal examined the taxability of activities related to the enhancement of the 'ash bund' storage facility, emphasizing the construction elements and excavation work involved in the project.

10. Circulars and statutory provisions related to taxable services were analyzed to understand the scope and intent of the tax entries under the Finance Act, 1994, in relation to the services provided by the appellant.

11. The tribunal conducted a detailed analysis of the services provided, the tax liability associated with each activity, and the identification of the service provider responsible for rendering taxable services.

12. Based on the above analysis, the tribunal made decisions regarding the taxability of services, penalties imposed, and the interpretation of relevant statutory provisions, ultimately dismissing the appeals and providing clarity on the tax liabilities in question.

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