2018 (7) TMI 1004 - AT - Service Tax

Classification of services - contract executed was for removal of over burden in the mine attached to the cement factory - Whether classified under the head Site Formation and Clearance Excavation Earth moving and Demolition Services or otherwise? - Held that - The activity carried out by the appellant was limited to removal of over burden only. Even though such activity has been carried out in the mine area the contract does not cover any other activity relating to mining. Hence it is to be considered as a service contract simplicitor for the activity of removal of over burden. This activity is very much covered within the definition of Site Formation and Clearance Services which was included in the statute w.e.f. 16/06/2005 - demand under the head upheld. Time limitation - Held that - It is seen from the record that the appellant has failed to discharge their responsibility in terms of self assessment of the tax and filing statutory returns - Revenue is justified in invoking the extended period in raising the present demand. Appeal dismissed - decided against appellant.

Issues:
1. Whether the activity carried out by the appellant is liable for payment of Service Tax under the category of 'Site Formation and Clearance, Excavation, Earth moving and Demolition Services'?
2. Whether the demand for Service Tax for the period prior to the date when mining service was made liable for payment of Service Tax is sustainable?
3. Whether the demand is hit by limitation due to the issuance of the show cause notice after a certain period?
4. Whether the activity of removal of over burden in the mine area is to be considered as a service contract simplicitor for the activity of removal of over burden?
5. Whether the case laws cited in support of the appeal are applicable to the present case of a contract simplicitor for removal of over burden?
6. Whether the appellant's argument of time bar is valid, considering the failure to discharge responsibilities in terms of self-assessment of tax and filing statutory returns?

Analysis:

1. The appellant argued that the activity carried out in the mines attached to the cement plant was related to mining and not 'Site Formation and Clearance'. The appellant highlighted the contract terms requiring the deployment of equipment for top soil removal in the mine, asserting that the activity should be considered as mining-related. The appellant also pointed out that mining service became liable for Service Tax only from a specific date. The Commissioner (Appeals) opined that the activity would fall under mining service from a certain date.

2. The Department contended that the activity was limited to the removal of overburden, which is a preliminary activity before mining. Referring to a CBEC Circular, the Department argued that overburden removal falls under 'Site Formation Service', distinct from activities like coal cutting and mineral excavation, which are under 'Mining Services'. The Department emphasized that the contract was solely for overburden removal, justifying the Service Tax under 'Site Formation'.

3. The Tribunal examined the contract terms, which indicated that the appellant's activity was solely for overburden removal. The Tribunal differentiated this case from those involving composite contracts covering both overburden removal and mining activities. The Tribunal upheld the Service Tax liability under 'Site Formation' for the appellant's contract limited to overburden removal.

4. Regarding the time bar issue, the Tribunal noted the appellant's failure to fulfill tax assessment and return filing obligations. Consequently, the Tribunal deemed the revenue justified in invoking the extended period for raising the demand. Ultimately, the Tribunal upheld the impugned order, rejecting the appeal.

This comprehensive analysis addresses the key issues raised in the legal judgment, providing detailed insights into the arguments presented by both parties and the Tribunal's reasoning for upholding the decision.

← Previous Next →