2017 (5) TMI 827 - AT - Service Tax

Site Formation and Clearance, Excavation and Earthmoving and Demolition Service - liability of tax - contracts executed with 5 other companies - Held that - It appears that these companies have placed orders for supply of explosives and accessories and there is no service element in the work order - Amount received by them in respect of supply of explosives, without involving rendering of service in respect of various contracts, cannot be subjected to service tax levy, without individually examining and appreciating the scope of supply/ work order. This has to be done by the Original Authority to correctly determine the service tax liability of the appellant - matter on remand. Benefit of N/N. 17/2005- ST dated 16/06/2005 - services with reference to drilling and blasting of rocks - Held that - the quarrying of stone is done away from construction of road and it is only to produce raw material for road laying. The activity itself is not in the course of construction of road. However, the appellants claimed that in case of M/s R.K. Transport, they have undertaken the road cutting work themselves. This requires verification by the Original Authority, as the appellants produced only a certificate from M/s R.K. Transport - matter on remand. Transaction with M/s Jayaswal Neco Industries Ltd. - sale or service? - Held that - the claim of the appellant that the activity involved is construction of road, is not acceptable in view of the reasons recorded earlier in this order. We also find no infirmity in the findings by the Original Authority in borrowing the definition of mine and mining from Mines Act, 1952 and Mines and Minerals (Development and Regulation) Act, 1952/1957 - demand upheld. Regarding the transactions with M/s Saumya Mining Ltd., the appellants contested the tax calculation on the ground that part of the consideration were received beyond the 5 year period from the date of show cause notice and is accordingly hit by time bar. This requires cross verification by the Original Authority. Regarding supply of tangible goods, we find that the appellant s plea that they have provided van for transportation charges and, as such, cannot be considered as supply of tangible goods has force - since other issues are remanded, this issue will also be remanded for verification. Appeal allowed by way of remand.

Summary

Issues:
Service tax demand on various activities, exemption under Notification 17/2005-ST, service tax liability on specific contracts, tax calculation on transactions, taxable consideration for services, supply of tangible goods.

Service Tax Demand on Various Activities:
The appeal challenged the service tax demand of ?1,02,01,225 imposed by the Original Authority on the appellant for 6 different taxable services. The appellant contested the demand, arguing that certain specific contracts did not involve taxable services. The Tribunal found merit in the appellant's submission regarding the supply of explosives without a service element in the work order, directing the Original Authority to correctly determine the service tax liability.

Exemption under Notification 17/2005-ST:
Regarding contracts with specific companies, the appellant claimed exemption under Notification 17/2005-ST for services related to drilling and blasting rocks in the course of road construction. The Tribunal analyzed the scope of the notification and held that the activity of quarrying stones away from the construction site did not qualify for the exemption. The Original Authority was directed to verify the nature of the contracts for a fresh decision.

Service Tax Liability on Specific Contracts:
Disputes arose over the service tax liability on contracts with various companies. The Tribunal examined each contract individually, considering the nature of services provided and the applicability of relevant notifications. The Original Authority was instructed to reevaluate the disputed contracts to determine the correct tax liability.

Tax Calculation on Transactions:
Challenges were raised regarding the tax calculation on transactions with specific companies, including issues of time-barred considerations and construction activities. The Tribunal directed the Original Authority to cross-verify the claims made by the appellant and make a fresh decision based on the findings.

Taxable Consideration for Services:
The appellant contested the calculation of taxable consideration for services rendered to a particular company. The Tribunal noted the submission and directed the Original Authority to verify the claims and make a decision accordingly.

Supply of Tangible Goods:
Regarding the supply of tangible goods, the appellant argued that providing a van for transportation charges did not constitute a supply of tangible goods. The Tribunal acknowledged the argument and remanded the matter for the Original Authority to examine the contracts related to the supply of tangible goods for a fresh decision.

The Tribunal set aside the impugned order partially, remanding the issues requiring denovo decision back to the Original Authority for reevaluation. The appellant was granted the opportunity to present their case, and the appeal was allowed partly by way of remand.