2022 (8) TMI 281 - AT - Service Tax

Classification of services - to be classified under GTA services or under mining services? - deployment of loaders, excavators, dozers for removal of overburden, waste ash, spillage, etc. and also loading of raw coal, clean coal, secondary coal, rejects and ash, etc. - deployment of tippers and coal dumpers for transportation of coal, secondary coal, rejects, tailings and ash etc - transportation of raw coal from colliery pit head to power plant and crusher plant and there from to the washeries; railway sidings, stock yard and such other destinations as specified by TSL - evacuation, loading and transportation of dolomite, within the respective areas under West Bokaro Mines, Chhattisgarh and Gomardih Dolomite Mines. HELD THAT - From the Show Cause Notice and the Order-in-Original, it is found that it is not in dispute that the transport services have been provided within the mining area of TSL by the Respondent and the same relates to Transportation of raw coal from colliery pit head to power plant and crusher plant and there from to the washeries; railway sidings, stock yard and such other destinations as specified by TSL and transportation of dolomite, within the respective areas under West Bokaro Mines, Chhattisgarh and Gomardih Dolomite Mines - when it has not been disputed by the Appellant Revenue that the transport activities have been performed within the mining area of TSL, then confirmation of demand on such activity by treating the same as mining service cannot be sustained. The transport charges cannot be included in the valuation for mining services and thus the order of the Ld. Adjudicating authority is correct in the eyes of law - Appeal dismissed - decided against Revenue.

Summary

Issues:
Classification of services under GTA services or mining services.

Analysis:

1. The case involved a dispute regarding the classification of services provided by the Respondent under the agreement with M/s. Tata Steel Limited (TSL) from 2009-10 to 2011-12. The Department appealed against the dropping of the demand of service tax on mining services by the Commissioner of Service Tax-1, Kolkata. The Department argued that the activities undertaken by the Respondent, including transportation of coal and dolomite within the mining area, should be classified as mining services under the Finance Act, 1994.

2. The Department contended that the Respondent's activities constituted a composite activity and should be taxed under mining services, not separately under GTA services. The Department also sought confirmation of the demand under site formation services and maintenance and repair services. On the other hand, the Respondent argued that the transportation activities within the mining area should not be classified as mining services, citing the Ld. Adjudicating authority's decision and a judgment of the Hon'ble Supreme Court in a similar case.

3. The Ld. Advocate for the Respondent extensively referred to the agreement's contents and payment schedules, emphasizing that the transportation activities should be classified under GTA services. He highlighted a previous order where the demand for service tax was dropped, supporting the Respondent's position. The Respondent also raised issues regarding the Department's calculation of the demand based on disclosed figures without considering reconciliations provided during audits.

4. After hearing both sides and reviewing the records, the Tribunal focused on the core issue of whether the Respondent's activities should be classified under GTA services or mining services. The Tribunal noted that the transportation services provided by the Respondent within the mining area of TSL were not disputed by the Department. Referring to a judgment of the Hon'ble Supreme Court, the Tribunal concluded that the transport charges should not be included in the valuation for mining services, supporting the Respondent's position.

5. Based on the precedent set by the Hon'ble Supreme Court and the specific circumstances of the case, the Tribunal upheld the Ld. Adjudicating authority's decision, dismissing the Department's appeal in its entirety. The Tribunal ruled in favor of the Respondent, stating that the transport activities within the mining area should be classified under GTA services, not mining services, as argued by the Department.

6. Ultimately, the Tribunal's decision was based on the interpretation of relevant legal provisions and previous judgments, ensuring consistency in the classification of services provided by the Respondent. The Tribunal's detailed analysis and reliance on established jurisprudence led to the dismissal of the Department's appeal and the affirmation of the Ld. Adjudicating authority's order.