2017 (9) TMI 1067 - AT - Service Tax

Mining services - activity of excavation of overburden and earthwork, and shifting of the same from mine pit to other areas within the factory - demand for the period before 01.06.2007 - Held that - the mining service was made taxable w.e.f. 01.06.2007. After this date, the department has accepted the services provided by the appellant as mining services. Hence, prior to 01.06.2007, the same cannot subject to service tax under a different service - similar issue decided in the case of M/s National Construction Company Versus CCE, Jaipur 2014 (3) TMI 79 - CESTAT NEW DELHI , where it was held that service tax demand for the period prior to 16/6/05 is not sustainable at all - the demand for the period prior to 01.06.2007 pertaining to the mining services set aside. Valuation - Free supply of diesel by the customers - Held that - similar issue decided in the case of M/s Bhayana Builders (P) Ltd. & Others Versus CST, Delhi & Others. 2013 (9) TMI 294 - CESTAT NEW DELHI (LB) , where it was held that The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in Section 67 of the Finance Act, 1994 - decided in favor of appellant. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Taxability of mining services pre-01.06.2007
2. Taxability of free supply of diesel by customers

Analysis:
1. The appeal was against an Order-in-Original dated 25.09.2013 for the period from October 2004 to December 2009. The appellant was engaged in excavation, overburden removal, and shifting activities within the factory area. The Department brought these activities under service tax from 06.08.2007 under "mining services." The dispute arose as the Department also demanded service tax pre-01.06.2007 under cargo handling service. The Tribunal noted that mining services were taxable from 01.06.2007, and post this date, the Department accepted the services as mining services. Therefore, activities pre-01.06.2007 could not be taxed under a different service category. Citing precedent, the Tribunal set aside the demand for the period pre-01.06.2007 related to mining services.

2. The next issue concerned the demand on the free supply of diesel by customers. Referring to a previous case, the Tribunal observed that free supplies by a construction services recipient for incorporation in constructions would not constitute non-monetary consideration to the service provider. The Tribunal decided in favor of the appellant, stating that the value of free supplies by customers would not form part of the gross amount charged for services provided. The Tribunal's decision was in line with legislative provisions and established legal principles, ultimately setting aside the impugned order and allowing the appeal filed by the appellant.