2015 (9) TMI 424 - HC - Service Tax

Nature of service - Whether every service rendered in mining area would have to be classified under Mining Service or it has to be classified according to its scope and nature of the work? - Whether the service as defined in the scope of the contract could be more appropriately classifiable under Cargo Handling Services ? - Whether the Tribunal was right in holding that the limestone and rejects are not goods? - Held that - while this Court is not inclined to deal with the matter, while disposing off the present appeal as not maintainable, is inclined to grant liberty to the appellant/department to pursue the matter before the Supreme Court, if so advised. - this appeal is disposed of with liberty to the appellant/department to move before the Supreme Court, if so advised - appeal dismissed - decided against the revenue.

Summary

Issues:
Classification of services in a mining area, applicability of service tax on activities, determination of substantial questions of law, maintainability of appeal before the High Court.

Classification of Services in a Mining Area:
The case involved the classification of services rendered in a mining area, specifically focusing on whether activities should be classified under "Mining Service" or based on the scope and nature of the work. The appellant was engaged in loading, unloading, and transporting limestone from mines on a contract basis. The Department argued that these activities fell under "Cargo Handling Services" and were thus liable for service tax. However, the assessee contended that the activities should be classified under mining of mineral, oil, and gas. The Tribunal held that the movement of limestone and rejects in the mining area was covered under 'mining of mineral, oil, gas' and not under 'cargo handling service,' thereby allowing the appeal.

Applicability of Service Tax on Activities:
The Department issued a show cause notice to the assessee for not paying service tax on the activity of loading and transportation of limestone and rejects. After adjudication, the authority demanded payment of service tax, education cess, interest, and imposed penalties on the assessee. The Tribunal, considering various decisions, concluded that the activities were not taxable under 'cargo handling service' but fell under 'mining of mineral, oil, gas,' thereby ruling in favor of the assessee.

Determination of Substantial Questions of Law:
The High Court framed substantial questions of law for consideration, including the classification of services in a mining area and whether the limestone and rejects should be considered goods. The Court examined the arguments presented by both parties, considered relevant legal precedents, and evaluated the implications of the issues raised.

Maintainability of Appeal Before the High Court:
The first respondent objected to the maintainability of the appeal before the High Court based on Section 35G of the Central Excise Act, 1944. Citing the decision in Navin Chemicals case, it was argued that questions relating to the rate of duty, value of goods, and classification of goods for assessment purposes should not be entertained by the High Court. Following the legal principles outlined in the Navin Chemicals case and subsequent judgments, the High Court found that the issue raised in the present case directly related to the classification of goods and rate of duty, making the appeal not maintainable before the High Court. The Court granted liberty to the appellant/department to pursue the matter before the Supreme Court if desired.