2009 (6) TMI 172 - AT - Service Tax

Composite contract executed by the appellant and activities like excavation, transportation from the mining site to the crushing site, mining goods and transportation of the crushed goods to the door of the buyer - Such distinct activities themselves are taxable distinctly under provisions of law. When the composite contract was executed involving several taxable services, value of each such taxable service was not worked out by the appellant to make its claim on this basis of evidence - Keeping in view that the appellant may fall under tax net for various activities carried out as above and details of which shall be examined in the course of appeal hearing, it would be proper to grant the stay partly

Issues:
Taxability of services provided under a composite contract involving excavation, transportation, and crushing activities. Applicability of service tax under different categories for the period 2002-2007.

Analysis:
1. The appellant argued that since mining activity was brought under the tax purview in 2007, they should not be taxed for the period before that. The appellant contended that the activities like excavation, transportation, and crushing formed part of a composite contract and should not be taxed arbitrarily. They relied on the case of Sainik Mining & Allied Services Ltd. v. CCE to support their argument that movement of coal within the mine should not attract service tax.

2. The appellant raised concerns about being charged under different categories for the same activities during different periods. They highlighted that they were initially charged under 'Cargo Handling Service' up to 2004 and then under 'Business Auxiliary Service' from October 2004 to March 2007. The appellant argued that since the nature of the activity remained the same, the category should not have been changed arbitrarily.

3. The appellant contended that they had already paid service tax under the category of Business Auxiliary Service for the years 2005-06 and 2006-07. They argued that changing the tax category arbitrarily would lead to double taxation. The appellant requested the waiver of the service tax demand for the period 2002-07, amounting to Rs. 1,89,44,579, and the pre-deposit requirement.

4. The Department argued that the appellant was liable to pay service tax under the category of Cargo Handling Service for the period 2002-2004 and under Business Auxiliary Service for the period 2004-2007 based on relevant tribunal judgments. The Department emphasized the need for the appellant to pre-deposit the entire service tax demand.

5. The Tribunal examined the scope of services provided by the appellant, which involved a composite contract comprising various taxable activities like excavation, transportation, and crushing. The Tribunal noted that each taxable service should be valued separately, and loading and unloading activities within the mining area did not fall under Cargo Handling Service. The Tribunal referenced previous judgments to clarify the taxability of different activities.

6. Considering the various taxable activities carried out by the appellant, the Tribunal directed the appellant to make a pre-deposit of Rs. 20 lakhs within six weeks. The Tribunal stated that the details of the taxable services would be further examined during the appeal hearing, and the realization of the remaining demand was stayed pending compliance.

This detailed analysis outlines the key arguments presented by the appellant, the Department's position, the Tribunal's assessment of the composite contract, and the decision regarding the pre-deposit requirement and further examination of the taxable services during the appeal process.

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