2013 (11) TMI 1452 - AT - Service Tax

Demand of service tax - Classification of service - Service tax not paid in respect of contract dated 21.12.2003 under Site Formation, Clearance, Excavation, Earthmoving and Demolition services under Section 65(97a) - Excavation, Earthmoving and Demolition services - Held that - activity undertaken by the appellants is excavation and removal of O/B waste and mining of ore. We also note that there is only one contract with the appellants showing the scope of work as excavation and removal of O/B waste and mining of ore. This activity starts from excavation and ends at mining of ore. We find that this is a composite activity and cannot be split into two separate parts for levy of service tax - removal of over burden and excavation of ore is undertaken for mining of ores only and activity does not fall under Site Formation and Excavation and Earth moving and Demolition service - Decided in favour of assessee.

Summary

Issues:
1. Classification of services provided by the appellants under Site Formation, Clearance, Excavation, Earthmoving, and Demolition services or under Mining Service.

Analysis:
The case involved an appeal by M/s. Associated Soapstone Distributing Co. Pvt. Ltd. against an Order-in-Original passed by the C.C.E., Jaipur-II, regarding the payment of service tax on excavation and removal services provided at a mining site. The appellants had not paid service tax on these services, leading to a Show Cause Notice demanding payment. The Commissioner confirmed the service tax with interest and penalties, which the appellants challenged in the present appeal.

The main contention raised by the appellants was that the activities of excavation and removal of waste were integral to the mining activity and should not be taxed separately. They argued that there was a single composite contract for mining, and the separate rates mentioned did not indicate separate contracts. The Revenue, on the other hand, argued that since payments were received separately for site formation, excavation, and clearance, it was not a composite contract, justifying the service tax under the relevant sections of the Finance Act.

After considering the arguments, the Tribunal analyzed the relevant sections of the Act pertaining to Site Formation, Clearance, Excavation, and Earthmoving services, as well as Mining Services. The Tribunal noted that the appellants' activities included excavation and removal of waste alongside mining operations, all covered under a single contract. Relying on a previous decision, the Tribunal concluded that the activities were part of a composite process and could not be taxed separately. Therefore, the Tribunal held that the services provided did not fall under Site Formation, Clearance, Excavation, Earthmoving, and Demolition services but rather under Mining Services.

Consequently, the Tribunal set aside the Commissioner's order, allowing the appeal of the appellants and disposing of the Miscellaneous Application filed by them. The judgment was pronounced on 04.10.2013 by the Tribunal, represented by Mr. G. Raghuram and Mr. Sahab Singh, JJ.