2017 (9) TMI 1327 - AT - Service Tax

Cargo Handling Services - Site Formation Services - composite contract - Held that - The service tax have been demanded under the category of Cargo Handling Services for the work carried out by the appellant for moving Iron Ore Lumps from mines to the crusher plant. The appellant also appears to have carried out the incidental loading and un-loading of Iron Ore - the Tribunal in the case of Sainik Mining & Allied Services Ltd. vs. Commr. Of C.Ex., Cus. & S.T., BBSR 2007 (11) TMI 90 - CESTAT, KOLKATA has held that the transportation of coal within the mining area is not covered under the category of Cargo Handling Services - there is no justification to upheld the demand of service tax under the category of Cargo Handling Services for the work of transportation of iron ore carried out within the mining area. Removal of over burden carried out by the appellant - whether classified under the category site formation services for the period prior to 01.06.2007 when the category of mining services was introduced separately? - CBEC Circular dated 12.11.2007 - Held that - Tribunal in the case of M.Ramakrishna Reddy vs. Commr. Of C.Ex. & Cus, Tirupathi 2008 (10) TMI 115 - CESTAT, BANGALORE has held that removal of overburden and excavate of ore undertaken as per mining contract cannot be covered under the category of Site formation - Since the period of duty in the present case is prior to 01.06.2007, the demand of service tax under the category of Site Formation Services is not justified and is set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Service tax demand on removal of mining reject and transportation of lump ores.
2. Applicability of service tax on cargo handling services.
3. Classification of removal of overburden activity under site formation services.

Analysis:
1. The appellant entered into a contract with a company for various services, and the department demanded service tax on specific services. The appellant contended that the services were part of a composite contract for mining of iron ore and should only be liable to service tax from a certain date. The appellant cited case laws to support their argument. The Tribunal found that the transportation of iron ore within the mining area did not fall under cargo handling services, as established in previous judgments. Therefore, the demand for service tax under cargo handling services was not upheld.

2. The department also demanded service tax for removal of overburden activity under site formation services. The appellant argued that the essential character of the work was mining, and it should be classified as mining services rather than site formation services. The Tribunal referred to relevant provisions and previous judgments to conclude that the services rendered by the appellant were classifiable only under mining services. As the contract was comprehensive for mining, the services could not be divided for levying service tax on site formation. Thus, the demand for service tax under site formation services for the period before a specific date was set aside.

3. In summary, the Tribunal set aside the impugned order and allowed the appeal filed by the appellant, stating that the demand of service tax under cargo handling services and site formation services was not justified for the specified periods. The judgment was pronounced in an open court on a particular date.