2019 (4) TMI 181 - AT - Service Tax

Classification of services - Survey and Exploration of Mineral Service or not - demand of the short-paid service tax along with interest and penalties - Held that - From the activities explained by the appellant it can be seen that these activities have nothing to do with Survey Exploration of Mineral Service. Appellants have undertaken mainly the preparation of camps mobilization and also upkeep and maintenance of these camps. The Commissioner (Appeals) for the period from 25.4.2006 to 20.12.2007 has analyzed the very same issue in detail and held that the activities does not fall under Survey Exploration of Mineral Service. It was held that activity of the appellant are not in the nature of seismic services and collection / processing, interpretation of data and drilling or testing in relation to survey and exploration - The CBEC vide its Circular No. 80/10/2004-ST dated 10.9.2004 has clarified that the service tax under this category would be limited to the services rendered in relation to Survey and Exploration only and not on the activity of actual extraction after the survey and exploration is complete. The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax. The activity undertaken by the appellant is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under the definition of Survey Exploration of Mineral Services. Demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activities undertaken by the appellant fall under the category of Survey and Exploration of Mineral Service?

Analysis:
The appellants were registered for various services with the Department and were involved in providing Shot Hole Drilling and 3D seismic job services under agreements with other companies. The Department alleged that these activities fell under the category of Survey and Exploration of Mineral Service, leading to the issuance of Show Cause Notices for short-paid service tax, interest, and penalties. The original authority confirmed the demand and imposed penalties, prompting the appeal.

The appellant argued that their activities did not fall under the said category as they were mainly involved in camp mobilization, maintenance, and other related services, not directly related to mineral exploration. They contended that they were sub-contractors and not liable for the service tax, citing a previous decision where a similar demand was set aside.

On the other hand, the Department supported the findings, stating that the activities, including shot hole drilling, indeed fell under Survey and Exploration of Mineral Services. They referenced a previous Tribunal decision where a similar matter was remanded for further review.

Upon hearing both sides, the Tribunal analyzed the activities in question. They referred to the definitions provided under Section 65(105)(zzv) and Section 65(104a) to determine the scope of Survey and Exploration of Mineral Services. The Tribunal found that the appellant's activities related to camp mobilization, maintenance, and other services were not within the ambit of mineral exploration. They highlighted the Commissioner (Appeals)'s previous decision and a CBEC Circular to support their conclusion.

Considering the precedents and lack of appeal by the Department against the earlier decision in favor of the appellant, the Tribunal ruled in favor of the appellant. They set aside the impugned order, allowing the appeal with consequential relief. The miscellaneous application filed by Revenue for a change of cause title was also allowed.

In conclusion, the Tribunal held that the appellant's activities did not fall under Survey and Exploration of Mineral Services, as they were primarily engaged in camp-related services, not directly related to mineral exploration. The decision was based on legal definitions, precedents, and lack of appeal against a previous favorable decision for the appellant.