2009 (8) TMI 745 - AT - Service Tax

Waiver of pre deposit Site formation and clearance service - work involved is to remove the iron slime and soil accumulated in the dam - Notification No. 17/2005S.T., dated 7th June, 2005 exempts activities rendered - in the course of construction of airports, roads, bridges, dams etc., from service tax under the head site formation and clearance, excavation etc - construction of a dam cannot be subjected to tax classifying it as site formation and clearance excavation and earthmoving and demolition - order is prima facie not sustainable - complete waiver allowed

Summary

Issues:
1. Demand of service tax for services rendered under specific headings.
2. Interpretation of the scope of services under the headings "Site formation and clearance, excavation, earthmoving and demolition services."
3. Applicability of service tax on construction of a dam under a specific contract.
4. Consideration of exemptions under Notification No. 17/2005S.T. for construction activities.

Analysis:
1. The judgment dealt with a demand for service tax amounting to Rs. 78,20,999/- for services classified under "Site formation and clearance, excavation, earthmoving and demolition services" provided by the appellant during a specified period. The appellant sought a stay on the demand, interest, and penalty imposed under Section 78 of the Finance Act, 1994.

2. The first item of work involved desilting of an iron ore dam and transportation of ores, which the appellant argued did not fall under the specified service category. The appellant relied on a Board's Circular to support their position. The JCDR contended that the activity constituted excavation and removal of accumulated slime, justifying the demand. The Tribunal, after reviewing submissions, found that desilting did not align with the specified service category.

3. The second item of work pertained to the construction of a dam under a contract with a steel company. The Tribunal examined the contract and noted that construction of a dam was not taxable under the heading of "site formation and clearance, excavation, earthmoving and demolition services." Citing Notification No. 17/2005S.T., which exempts certain construction activities from service tax, the Tribunal ruled in favor of the appellant, ordering a complete waiver of the pre-deposit and stay on recovery pending appeal decision.

4. The judgment highlighted the importance of correctly interpreting the scope of services under specific headings for service tax purposes. It emphasized the need to consider relevant notifications and circulars to determine tax liability accurately. The Tribunal's decision underscored the significance of aligning the nature of work with the specified taxable services to avoid erroneous tax demands and ensure compliance with legal provisions.