2010 (3) TMI 478 - AT - Service Tax

Mining Service Stay Demand raised under survey and exploration service Site Formation service mining service and business auxiliary service. Held that for non liability under BAS production of iron ore claimed to be eligible activity. Activities prima facie mining service taxable from 1.6.2007 and cannot be taxed under any pre existing entry. Turnkey contract further cannot be vivisected as per Tribunal order. Thus prima facie case against demand and penalty.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of liabilities adjudged against the appellant.
2. Classification of activities such as drilling, blasting, excavation, raising iron ore, crushing, screening, grading, processing, and transportation for clients.
3. Taxability under 'Business Auxiliary Service' and 'site formation and clearance, excavation and earth moving and demolition service'.
4. Interpretation of relevant legal provisions and precedents.
5. Application of Central Excise Act, 1944 and Central Excise Tariff, 1985.
6. Prima facie sustainability of demand and penalties.

Analysis:
1. The appellant sought waiver of pre-deposit and stay of recovery of liabilities including service tax, interest, and penalties under various sections of the Finance Act, 1994. The impugned order confirmed these liabilities, leading to the request for relief pending appeal.

2. The activities undertaken by the appellant for clients were scrutinized, including drilling, blasting, excavation, raising iron ore, crushing, screening, grading, and processing. The issue revolved around the classification of these activities under 'site formation and clearance, excavation and earth moving and demolition service' and 'business auxiliary service'.

3. The Tribunal analyzed precedents like CMS (I) Operations and Maintenance Co. P. Ltd. case to determine the taxability of the appellant's activities. The classification under 'Business Auxiliary Service' was challenged based on the production of iron ore not falling under the definition. Similarly, the 'site formation' activities were assessed in light of relevant legal provisions and CBEC clarifications.

4. The interpretation of the Central Excise Act, 1944 and Central Excise Tariff, 1985 played a crucial role in determining the tax liability of the appellant. Precedents were cited to support the argument that certain activities cannot be vivisected for taxation purposes, emphasizing the need for precise determination of taxable value.

5. The Tribunal delved into the applicability of the Central Excise Act, 1944 and relevant notifications to ascertain the taxability of the appellant's activities related to iron ore production. The argument that such activities do not fall under 'Business Auxiliary Service' was supported by references to legal provisions and notifications.

6. Ultimately, the Tribunal found that the demand and penalties were not prima facie sustainable, citing precedents like M. Ramakrishna Reddy case to support the decision. The appellant's arguments against the taxability of their activities were upheld, leading to a complete waiver of pre-deposit and stay of recovery pending appeal.