2024 (9) TMI 1417 - AT - Service Tax

Classification of activity of appellant - falls under the category of mining service as claimed by the department or transport service as submitted by the appellant? - period 2009-2010 to 2013-2014 - HELD THAT - On the basis of 26-AS record it does not show the actual detail of the activity carried out by the appellant. Therefore, in the entire case there is no concrete evidence to establish that the appellant have provided the mining service. The invoices produced by the appellant also do not suggest that the appellant have provided any mining service. The appellant is admittedly a transport contractor providing transportation service. The 3 CD report under Income Tax also shows that the appellant is a transport contractor. As per the 26-AS, the deduction of TDS made by the service recipient is under Section 197 C of the Income Tax which is applicable in case of transportation service. Therefore, in one hand, the revenue could not produce any evidence to establish that the appellant have provided the mining service whereas all the books of account and other documents produced by the appellant shows that they being a transport contractor provided the transportation service of mined goods. Therefore, the appellant s activity cannot be classified under mining service. The appellant have also relied upon the board circular F.No. 232/2/2006-CX.4 dated 12.11.2007 wherein at paragraph 5 the board has clarified that transportation of mineral from pithead to a specified location even within the mine or for transportation outside the mine are chargeable to service tax under relevant taxable service i.e. goods transport by road - In the present case since the appellant have transported the mineral in their own vehicle and have not issued any consignment note in this regard, their service is that of transportation of goods by road. Therefore, the demand under mining service is not maintainable. This issue has been considered by the Hon ble Supreme Court in the case of Singh transporters 2017 (7) TMI 494 - SUPREME COURT wherein it was held that transport of coal from pithead to railway siding within the mining area is classifiable under GTA service and not under mining service. Similar view was taken in the case of Rasleela Enterprises Pvt Ltd 2024 (1) TMI 888 - CESTAT NEW DELHI wherein the tribunal held that transportation charges received are not covered under mining service, therefore, the demand under mining service in the present case will not sustain as the appellant have provided transportation service. The impugned order is not sustainable and the same is set aside - Appeal allowed.

Summary

Issues:
Determining whether the appellant's activity falls under mining service or transport service for the period 2009-2010 to 2013-2014 and whether it is liable for service tax.

Analysis:
The dispute in this case revolves around whether the appellant's activities should be classified as mining service, as asserted by the department, or as transport service, as claimed by the appellant. The department alleged that the appellant provided mining services to certain entities, which were not registered for service tax. Consequently, a demand for service tax was raised and upheld by the Commissioner (Appeals), leading to the appellant's appeal.

The appellant, represented by a Chartered Accountant, argued that they were transport contractors and had not provided any mining services. They contended that until June 2012, transportation of goods by a person other than a goods transport agency was not taxable. They further asserted that their income from transportation was not classified as mining service, as they were not well-versed in tax-related provisions. The appellant also highlighted that tax had been deducted at source by the service recipients under the Income Tax Act, indicating that no service tax was applicable.

Upon examining the submissions, the tribunal found that there was insufficient evidence to support the department's claim that the appellant provided mining services. The tribunal noted that the appellant's records and activities indicated they were transport contractors, not engaged in mining services. Additionally, the tribunal referenced a board circular clarifying that transportation of minerals by road falls under the purview of goods transport services, not mining services.

Furthermore, the tribunal cited precedents, including a Supreme Court case and tribunal decisions, which supported the classification of transportation services over mining services in similar contexts. The tribunal emphasized that the demand for service tax was solely based on data from the Income Tax department, lacking substantial evidence to link the appellant's income to taxable mining services. This lack of corroborative evidence rendered the demand unsustainable.

In light of the above analysis, the tribunal concluded that the impugned order was not tenable. Therefore, the tribunal set aside the order and allowed the appeal in favor of the appellant. The decision was pronounced in open court on September 24, 2024.