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2023 (11) TMI 221 - AT - Service TaxNon-payment of service tax - Mining Service - hiring equipment with operators, maintenance staff and facilities for excavation work - The department entertained a view that appellant are engaged in site formation and clearance of the mining area and the amount received by them after 01.04.2005 should have been subjected to service tax for which neither the appellant have taken registration nor have they paid the service tax. HELD THAT - The excavation and removal of overburden/ earth all sorts of soil at all depths and disposing the excavated material within the mines premises is major item of work which has been assigned by M/s. GIPCL to the appellant. In the work schedule it can clearly be seen that excavation and removal of overburden material is an integrated work which primarily pertains to the mining of lignite - primary nature of service provided by the appellant to the service recipient is of mining service which was included in the service tax net vide Finance Act, 2004 with effect from 01.06.2007 under the service category of Mining Service. The appellant have duly discharged their service tax liability after 01.06.2007 under the service category of Mining Service. Thus the impugned order-in-original is without any merit. Reliance can be placed in the case of ASSOCIATED SOAP STONE DISTRIBUTING COMPANY PVT LTD VERSUS C.S.T. -SERVICE TAX AHMEDABAD 2022 (3) TMI 511 - CESTAT AHMEDABAD where it was held that The appellant have provided the Mining Service which was not liable to service tax during the relevant period in this case. Appeal allowed.
Issues Involved:
1. Classification of service under "Mining Service" vs. "Site Formation and Clearance, Excavation and Earth Moving and Demolition Service." 2. Invocation of the extended period of limitation. 3. Appropriateness of penalties imposed. Summary: Issue 1: Classification of Service The appellant, a joint venture firm providing Mining Service, entered into a contract with Gujarat Industries Power Company Limited (GIPCL) for excavation work, including the removal of overburden and lignite extraction. The department argued that the appellant's activities fell under "Site Formation and Clearance, Excavation and Earth Moving and Demolition Service" and issued a show cause notice demanding service tax for the periods before and after the introduction of the Mining Service category on 01.06.2007. The appellant contended that their activities were integral to mining and should be classified under "Mining Service." The Tribunal agreed with the appellant, citing previous decisions, including the Associated Soapstone case, and concluded that the primary nature of the service was mining of lignite, with overburden removal being ancillary. Therefore, the activities were correctly classified under "Mining Service," and the appellant had duly discharged their service tax liability post-01.06.2007. Issue 2: Invocation of Extended Period of Limitation The appellant argued that the demand was barred by the period of limitation, as there was no suppression of facts, misrepresentation, or fraud. The Tribunal found merit in this argument, noting that the demand pertained to the period from 01 July 2007 to 22 October 2012 and that the extended period of limitation was not justifiable. Consequently, the demand for the period 01 July 2007 to 2010-2011 was deemed barred by limitation. Issue 3: Appropriateness of Penalties Imposed The appellant contended that no penalties should be levied as the dispute arose from an interpretation of statutory provisions. The Tribunal supported this view, referencing decisions such as Bharat Wagon & Engg. Co. Limited vs. Commissioner of C. Ex., Patna, and Goenka Woollen Mills Limited vs. Commissioner of C. Ex., Shillong, which established that penalties are not applicable in cases involving interpretative disputes. Thus, the penalties imposed were deemed inappropriate. Conclusion: The Tribunal set aside the order-in-original, finding it without merit. The appeal was allowed, and the demand for service tax under the category of "Site Formation and Clearance, Excavation and Earth Moving and Demolition Service" was dismissed. The appellant's classification of their activities under "Mining Service" was upheld, and the penalties were annulled. The decision was pronounced in the open court on 03.11.2023.
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