2017 (11) TMI 1464 - AT - Service Tax

Valuation - includibility - whether the value of diesel supplied free by the customer is required to be included for purposes of levy of service tax? - Held that - the value of free supplies by the service receiver to the service provider is not includible in the gross amount charged‟ by the service provider from the service receiver - there is no justification for adding the value of free supply diesel for purposes of levy of service tax. Site formation and excavation service - levy of service tax - assessee s contract with M/s ACL for supply and deployment of earth moving equipments such as excavators, bulldozers etc for use in mining work - Held that - the SCN has referred to the various contracts executed by the assessee with M/s ACL. The adjudicating authority has also recorded the nature of activities required to be carried out and concluded that the contract was composite but the essential character of the contract is that of supply of tangible goods service and not site formation service - the service rendered to M/s ACL will be liable for service tax under the category of supply of tangible goods, that too only w.e.f. 16.5.2008 - decided against Revenue. Cargo Handling Service - case of Revenue is that nature of activity carried out in the mining area of ACL was transportation of limestone and rejects with the help of dippers and dumpers - Held that - The Tribunal in the case of Sainik Mining and Allied Services Vs. CCE 2007 (11) TMI 90 - CESTAT, KOLKATA has held that Activity of mechanical transfer of coal from the coal face to tippers and subsequent transportation of the coal within the mining area, does not come under the purview of cargo handing service - demand withheld - decided against Revenue. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Scope of service tax demand under different categories.
2. Inclusion of value of free supply of diesel for service tax levy.
3. Classification of service under supply of tangible goods or site formation service.
4. Justification for demand under cargo handling service.

Analysis:

Scope of Service Tax Demand:
The appeals involved a dispute regarding the service tax demands raised against the assessee for the period from April 2005 to March 2009. The department issued a show cause notice proposing service tax under various categories, including supply of tangible goods and site formation services. The impugned order confirmed certain demands while dropping others, leading to appeals from both the assessee and the revenue.

Inclusion of Free Supply of Diesel:
One of the critical issues in the appeal was the inclusion of the value of free supply of diesel by the customers for the equipment provided by the assessee. The appellant argued that such inclusion was not legally justified, citing precedents and established legal positions. The Tribunal concurred with the appellant's position, referencing various cases and holding that the value of free supplies should not be included in the gross amount charged for levy of service tax.

Classification of Service:
The dispute also revolved around the classification of services provided by the assessee to different entities. The adjudicating authority had classified the services under supply of tangible goods for certain contracts, while the revenue contended that the services should fall under site formation service. After detailed examination of the contracts and activities involved, the Tribunal upheld the classification under supply of tangible goods, specifically from a certain date, based on the essential character of the contracts.

Cargo Handling Service Demand:
Another issue addressed in the judgment was the demand for service tax under the category of cargo handling service for specific activities carried out by the assessee. The revenue had appealed against the dropping of these demands, arguing that the activities constituted cargo handling service. However, the Tribunal, relying on a previous decision, concluded that the activities did not fall under the purview of cargo handling service, ultimately dismissing the revenue's appeal on this ground.

In conclusion, the Tribunal set aside the impugned order, allowing the appeal filed by the appellant while dismissing the appeal filed by the Revenue, based on the detailed analysis and findings on the various contentious issues presented during the proceedings.