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2018 (11) TMI 175 - AT - Service TaxClassification of Services - Site Formation and Clearance, Excavation and Earthmoving and Demolition Services or not? - removal of Carbonaceous Shale and Hard Shale from the mining area upto the railways siding as per the terms of the contract - demand of Interest and penalties. Held that - In terms of the contract awarded by M/s North Eastern Coal Fields, Coal India Ltd., Assam, the activities carried out by appellant were for production of Carbonaceous Shale (CS) as well as transportation of Hard Shale (HS) from the mining area upto the railways siding - The service tax was not initially paid by the assessee, but what amount they received from M/s North Eastern Coal Fields, Coal India Ltd., Assam, the same has been paid to the Government Account. In the present case, the appellants were no doubt under bonafide belief that the activity may not be liable for payment of service tax as the activity of mining was included as a separate service tax w.e.f. 01.06.2007 only. Keeping in view the disputed nature of service tax and bonafide belief of the assessee, we are of the view that this is a fit case to waive penalties under Section 80 of the Finance Act, 1994 - demand of interest upheld. The issue is decided in the case of NATIONAL MINING CO. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DIBRUGARH 2007 (10) TMI 227 - CESTAT, KOLKATA , where the Kolkata Bench of the Tribunal, while upholding the payment of service tax, has sustained the order for payment of interest, but waived penalty. Interest upheld - penalty waived - appeal allowed in part.
Issues:
1. Service tax liability under the category of Site Formation and Clearance, Excavation, and Earthmoving Services. 2. Imposition of penalties under Sections 76 and 77 of the Finance Act, 1994. 3. Correct quantification of penalties under Section 76. 4. Waiver of interest and penalties due to a bonafide belief regarding service tax liability. Analysis: Issue 1: Service Tax Liability The appellant was awarded a contract for the production and transportation of materials as per the terms of the contract. The Department argued that the activities fell under the category of Site Formation and Clearance, Excavation, and Earthmoving Services, making them liable for service tax. The appellant did not initially pay the service tax but paid it after receiving the amount from the client. Both sides acknowledged the service tax liability, with the appellant requesting a waiver of interest and penalties due to a bonafide belief that the activity was not taxable. Issue 2: Imposition of Penalties In the appeal filed by the Revenue, it was contended that penalties under Section 78 were not imposed, and the adjudicating authority had only imposed penalties under Sections 76 and 77. The quantification of penalties under Section 76 was also challenged, citing an amendment overlooked by the adjudicating authority. Issue 3: Correct Quantification of Penalties The appellant argued that the quantification of penalties under Section 76 was incorrect, pointing out an amendment made to the section. The Revenue supported the order but emphasized the need for correct quantification of penalties. Issue 4: Waiver of Interest and Penalties The appellant, under a bonafide belief that the service tax was not payable, requested a waiver of interest and penalties. Citing relevant case laws, the appellant sought leniency based on the circumstances and the fact that the service tax liability was eventually met. The Tribunal, after considering the arguments and case laws presented, upheld the payment of service tax and interest. However, in line with precedents and acknowledging the bonafide belief of the appellant, the Tribunal partially allowed the appeal filed by the assessee, rejecting the appeal filed by the Revenue. The decision highlighted the importance of the disputed nature of the service tax and the appellant's genuine belief in waiving penalties under Section 80 of the Finance Act, 1994. This comprehensive analysis of the judgment addresses the key issues involved and the Tribunal's decision based on the arguments presented by both parties.
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