2023 (9) TMI 524 - AT - Service Tax

Classification of services - Mining Services or Business Auxiliary Service? - service of segregation of magnesite - HELD THAT - The impugned order had found that the activity is equally classifiable under both the services and as per section 65A of the Finance act 1994, the activity under the sub-clauses which occurs first among the sub-clauses is preferable. The learned Commissioner (Appeals) has hence chosen to accept the classification of the service as Business Auxiliary Service as in the Order in Original and rejected the appeal. The activity of collection, cleaning, segregation and stacking of blasted raw magnesite is provided in relation to mining. The activities undertaken by the appellant are a part of the mining operations and are more appropriately classified as a Mining Service . Mining activity has been made taxable by legislation with effect from 1.6.2007 only. Prior to this date, such activities, being part of mining operations, were not subjected to service tax. The period of demand in this case is from 6.10.2006 to 11.6.2007, therefore, no service tax is leviable on such activities for a major part of the impugned period. Thus, the activity of collection, cleaning, segregation and stacking of blasted raw magnesite is classifiable under the category Mining Services classifiable under section 65(105)(zzzy) of the Finance Act, 1994 and the demand is restricted to the period from 01/06/2007 onwards. Thus, duty and interest may be worked out accordingly - Since duty was payable only from 01/06/2007 late fee and penalties are set aside - appeal disposed off.

Summary

Issues involved:
The classification of service as 'Business Auxiliary Service' or 'Mining Service' under the Finance Act, 1994.

Details of the Judgment:

Issue 1: Classification of service under 'Business Auxiliary Service' or 'Mining Service'

The appeal was filed against the Order in Appeal No. 36/2014 dated 28.1.2014 passed by the Commissioner of Central Excise (Appeals), Salem. The appellant, engaged in collection, cleaning, segregation, and stacking of raw magnesite, was alleged to have not paid service tax for the period from 6.10.2006 to 11.6.2007. The original authority confirmed the demand of service tax and imposed penalties. The appellant contended that their services fell under 'Mining Services' and not 'Business Auxiliary Service,' citing precedents and judgments in their favor. The Tribunal examined the issue and found that the activities undertaken by the appellant were part of mining operations and more appropriately classified as 'Mining Service.' It was noted that mining activities were made taxable only from 1.6.2007, and as the demand period was prior to this date, no service tax was leviable for a major part of the period. The Tribunal referred to a previous order which supported the classification of such activities as 'Mining Services.' Consequently, the Tribunal held that the appellant's services were classifiable under 'Mining Services' under section 65(105)(zzzy) of the Finance Act, 1994, and the demand was restricted to the period from 01/06/2007 onwards. Late fees and penalties were set aside, and the appellant was granted consequential relief as per law.

This judgment highlights the crucial issue of classifying services under the appropriate category as per the Finance Act, 1994. The Tribunal's decision provides clarity on the classification of activities related to mining operations and emphasizes the importance of considering relevant legal provisions and precedents in determining the tax liability of the appellant.