2018 (9) TMI 1510 - AT - Service Tax

Classification of services - supply of explosives to the service recipient and also supervise the use of the same - Mining of Mineral Oil and Gas Services or not? - Held that - Mere supply of explosives and accessories was held as not involving any service element so as to attract service tax. However, in the present case apart from supply of explosives the appellant was also supervising the use of the same in the mines. The entire facts have to be adjudged from the terms of the contract and agreement - matter remanded to the original adjudicating authority for examining the entire aspect afresh - appeal allowed by way of remand.

Summary

Issues:
Service Tax demand confirmation against the appellant for the period 01.10.2008 to 30.09.2013 under the category of 'Mining of Mineral Oil and Gas Services'.

Analysis:
The appellant argued that they were not providing mining services but were supplying explosives and supervising their use as per the contract. The appellant contended that supervising the use of explosives does not fall under 'Mining of Mineral Oil and Gas Services'. They highlighted that the supervising activity was crucial to prevent accidental damage. The appellant emphasized that the contract clearly distinguished between the supply of explosives and the supervising activity, with separate considerations mentioned for each. The appellant also referred to a Tribunal decision in a similar case, where it was held that the supply of explosives does not constitute a service. However, the appellant acknowledged that the matter was remanded for further examination based on the contract terms. The appellant requested a similar treatment in this case.

The Revenue, represented by the LD.DR, supported the original adjudicating authority's reasoning and upheld the Service Tax demand.

The Tribunal referred to a previous case where it was held that the mere supply of explosives without any service element does not attract service tax. However, in the present case, besides supplying explosives, the appellant was also supervising their use. Therefore, the Tribunal remanded the matter to the original adjudicating authority for a fresh examination based on the contract terms. The Tribunal also left the time bar aspect open for the adjudicating authority to decide upon in the fresh examination.

In conclusion, the appeal was allowed by way of remand, with the Tribunal directing a re-examination of the case by the original adjudicating authority based on the terms of the contract and agreement.