2022 (4) TMI 256 - AT - Service Tax

Classification of services - mining services or not - providing contract to the respondent for loading and transfer of coal from one place to another in the licensed area of its mines - Non-payment of service tax - HELD THAT - The taxable service of mining defined under section 65 (105) (zzzy) of the Act means any service provided or to be provided to any person by any other person, in relation to mining of mineral, oil or gas. The Commissioner has placed reliance upon the definition of mines under the Mines Act, 1952 and has observed that all processing including handling and movement of coal from one point of mines to dispatch point of mines are activities carried out in relation to mining of minerals. This issue was examined by the Supreme Court in SINGH TRANSPORTERS VERSUS COMMISSIONER OF CENTRAL EXCISE, RAIPUR 2012 (7) TMI 566 - CESTAT, NEW DELHI . The issue involved was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Act. The Supreme Court held that the activity would appropriately be classified under the head transport of goods by road service and the activity does not involve any service in relation to mining of mineral as contemplated under section 65(105) (zzzy) of the Act. The Supreme Court also held that the definition of mines has no apparent nexus with the activity undertaken under the service rendered. The findings recorded by the Commissioner are in conformity with the judgment of the Supreme Court in the case of Singh Transporters - the service do not come under the scope of Mining services - demand do not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Appeal against dropping of proceedings by Commissioner of Service Tax.
2. Classification of services under 'mining services' for service tax liability.

Analysis:
1. The Department filed an appeal against the dropping of proceedings initiated by a show cause notice for non-payment of service tax under 'mining services.' The respondent, a contractor for coal loading and transfer, was alleged to have not paid service tax under the correct category. The Department argued that the services provided were ancillary to mining activities and should be classified as 'mining services.' The Commissioner dropped the proceedings based on the respondent's contention that their services did not fall under 'mining services.'

2. The Department contended that the respondent's activities, including coal transportation within mines, were related to mining activities and should be classified as 'mining services' for service tax liability. The Department relied on the definition of 'mines' under the Mines Act, 1952. However, the Commissioner accepted the respondent's argument and dropped the proceedings. The Department's appeal was supported by legal submissions emphasizing the ancillary nature of the services to mining activities.

3. The issue of classification under 'mining services' was analyzed in light of the Supreme Court judgment in Singh Transporters vs. Commissioner of Central Excise. The Supreme Court held that transportation of coal within mining areas does not fall under 'mining services' but is appropriately classified under 'transport of goods by road service.' The Court emphasized that the definition of 'mines' does not necessarily relate to the activities undertaken for service tax classification.

4. The Tribunal found that the Commissioner's decision was in line with the Supreme Court judgment, concluding that the respondent's activities did not qualify as 'mining services' for service tax liability. Therefore, the appeal was dismissed, upholding the dropping of proceedings by the Commissioner. The Tribunal's decision was based on the interpretation of relevant legal provisions and precedents, ensuring consistency with established legal principles.