2024 (10) TMI 1065 - AT - Service Tax

Classification of service - mining services or not - providing composite service in relation to mining i.e., rock breaking work, conversion of ores to different sizes, shifting / transportation of lumps and ores, removal of ROM, etc. - Non-payment of service tax of differential value of services provided during the relevant period - extended period of limitation. HELD THAT - It is apparent from the record that, whichever activities fall under the taxable net i.e., cargo handling service and mining service, the appellant is paying Service Tax and the same has been accepted by the authorities below during the impugned period. The appellant is not paying service tax on transportation of coal within the mine, along with loading and unloading, on the presumption that the said activity falls under goods transportation agency service and Service Tax thereon is payable under reverse charge mechanism by the service recipient and therefore they would not be liable to pay service tax. In this case, from the work orders, it is indicated that the appellant has to provide only transportation of coal from pithead to other places within the mine, or up to railway siding, along with incidental loading and unloading, which has been ignored by the authorities below. It is found that the said particular activity undertaken by the appellant does not fall under the category of mining service . Therefore, the said service is taxable under the category of transportation service, as has been held by this Tribunal in the case of M/s. Maa Kalika Transport Pvt. Ltd. 2023 (7) TMI 435 - CESTAT KOLKATA wherein this Tribunal observed ' service is provided in relation to transportation in such cases are based on if any ancillary/intermediate of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it.' - the appellant are not liable to pay service tax under the category of mining service . Only the differential amount between Profit Loss Account / balance sheet and S.T.-3 Return was sought to be demanded and whole of the amount pertains to transportation of coal within mining area along with loading and unloading. Therefore, the said activity falls under the category of transportation service, in these circumstances, no demand is sustainable against the appellant. Extended period of limitation - HELD THAT - The impugned Show Cause Notices have been issued to the appellant by invoking the extended period of limitation. The demands falling under extended period of limitation are not sustainable against the appellant in the facts and circumstances of the case. Therefore, appellant succeeds on limitation also. The fact that post 30th June 2012, the negative list regime came into force; however, the demand has not been made under the negative list but proposed to be confirmed under mining service - the said demand is not sustainable under the category of mining service for the period post 30th June 2012 - the Service Tax demands against the appellant are not sustainable. The impugned orders are set aside - appeal allowed.

Summary

Issues:
1. Challenge to orders passed by adjudicating authority regarding service tax payment for mining services.
2. Classification of services provided by the appellant under cargo handling service and mining service.
3. Validity of Show Cause Notices issued by invoking extended period of limitation.
4. Applicability of service tax under 'mining service' post-June 2012.

Analysis:
1. The appellant contested the Show Cause Notices alleging short payment of service tax for services provided in mining areas. The audit team identified discrepancies in service tax payments for the period 2006-2010, leading to the issuance of a Show Cause Notice for short payment of service tax under 'mining of mineral, oil or gas services' and 'cargo handling service'.

2. The appellant disputed the demand of service tax amounting to Rs. 5,85,61,748/- for the period up to and post-June 2007 under 'cargo handling service' and 'mining service'. Similarly, for the period 2012-2014, a Show Cause Notice was issued for transportation services within mining areas, leading to a confirmed demand of Rs. 2,28,37,002/- under 'mining service'.

3. The appellant argued that the transportation of coal within the mining area, along with loading and unloading, should not be classified under 'mining service' but as transportation service. They contended that the Show Cause Notices were time-barred as the activity was known and reported in Service Tax Returns.

4. The Tribunal observed that the transportation of coal within the mine by the appellant did not fall under 'mining service' but under transportation service based on the nature of the activity. Citing a previous judgment, the Tribunal highlighted that ancillary services like loading/unloading are integral to the principal service of transportation.

5. The Tribunal held that the demands against the appellant were not sustainable as the activity in question fell under transportation service, not 'mining service'. The demands made under the extended period of limitation were deemed invalid, and the demand post-June 2012 was not applicable under the 'mining service' category.

6. Consequently, the impugned orders were set aside, and the appeals were allowed in favor of the appellant, providing relief from the service tax demands.