2017 (3) TMI 727 - AT - Service Tax

Liability of tax - GTA service - Site formation and clearance service - wrong valuation - Held that - the demand has been made under GTA, the confirmation of tax liability has been made under the new category of Cargo Handling Service . This confirmation is legally not sustainable - on the transport of gypsum, the owner of the mines, M/s. FCI have paid service tax and the certificate to that effect has been produced by the appellant, thus, there will be no liability on the appellant on this category. Site formation and clearance service - Held that - extraction of gypsum is one of the activities in the composite contract. The activities carried out by the appellant in the mining area has been correctly categorized as mining service w.e.f. 1.6.2007. The Department accordingly confirmed the tax liability on the appellant. However, the same activity was sought to be classified as Site Formation and Clearance , prior to that date. We find such proposition is legally not sustainable. Wrong quantification of taxable value - Held that - the appellant s claim needs to be cross verified by the jurisdictional officers for correctness. The claim of the appellant is that they have not received an amount of ₹ 37,69,684/- as a consideration for taxable service. The appellant s liability as demanded under GTA service and Site formation & clearance service is not sustainable - the correctness of value of taxable service requires to be re-verified by the jurisdictional officer - appeal partly allowed and part matter on remand.

Summary

Issues:
1. Dispute over service tax liability for various activities.
2. Tax liability under different categories of taxable services.
3. Dispute regarding wrong valuation of service tax.

Issue 1: Dispute over service tax liability for various activities:
The appeal challenged the order of the Commissioner of Central Excise, Jaipur, regarding the liability of the appellant for service tax on activities related to gypsum extraction and processing under a contract with a specific company. The dispute focused on the service tax liability not discharged by the appellant, leading to penalties under various sections of the Finance Act, 1994.

Issue 2: Tax liability under different categories of taxable services:
The appellant contested the demand for service tax under "GTA Services" and "Site formation and clearance," along with an excess demand due to wrong valuation. The appellant argued that the demand under "GTA Services" was not sustainable as the mine owner had already paid service tax on transport of gypsum. Additionally, the classification of activities as "Site formation and clearance" for a period before 1.6.2007 was legally untenable, as mining services should have been applied. The appellant's claims were supported by legal precedents cited during the proceedings.

Issue 3: Dispute regarding wrong valuation of service tax:
Regarding the incorrect quantification of taxable value, the appellant claimed they had not received a specific amount as consideration for taxable services, leading to an excess demand of service tax. The Tribunal emphasized the need for factual verification by jurisdictional officers to ascertain the correctness of the appellant's claim. The Tribunal found the penalties imposed on the appellant unsustainable and suggested the invocation of Section 80 in this case.

In the final judgment, the Tribunal ruled in favor of the appellant, stating that the liabilities demanded under GTA service and Site formation & clearance service were not sustainable. The correctness of the taxable service value required re-verification by jurisdictional officers. The appeal was disposed of based on the above findings, highlighting the importance of factual verification and legal substantiation in tax liability disputes.