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TMI Blog2012 (3) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... ALCO), Korba and Hindalco Industries Ltd. (HINDALCO), Renukoot during the period Aug 2002 to March 2006. 2. Revenue was of the view that the service rendered by the Appellant to BALCO and HINDALCO was classifiable under "Cargo Handling Service" and they should have paid service tax. A Show Cause Notice dated 23-10-07, based on such proposition was issued and adjudicated resulting in confirmation of tax demand of Rs. 11,54,31,297/- along with interest and penalty equal to the same amount imposed under section 78 of the Finance Act, 1994. Aggrieved by the order the Appellants have filed this appeal before the Tribunal. 3. Definition of Cargo Handling Service under section 65(23) of the Finance Act 1994, during the relevant period was as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod prior to 01-01-2005/16-06-2005 no service tax is legally tenable as neither GTA nor Business Auxiliary Service was in force. A service which is covered under mining service from 01-06-2007 cannot be considered to be covered by any other service for the earlier period. At any rate the activity of the appellants cannot be considered as cargo handling service. If any part of the activity is considered to be cargo handling service for that reason service tax cannot be levied on the entire receipts under the contract. 6. The Counsel for the appellant argues that handling of cargo within a factory or mines cannot be considered as handling of cargo. He relies on the following decisions, among others, to buttress his argument: (i) S.B. Cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any person to any other person in relation to mining of minerals, oil or gas' has been comprehensively brought under the ambit of service tax with effect from 1-6-2007. However, for the prior period, certain disputes relating to chargeability of service tax on some of the services provided to mining sector were reported. In this regard, a draft circular dated 9-10-06 was put up on the official web-site, soliciting response from the stakeholders. The responses received have since been examined. 2. The mining sector (such as the coal mines, mining of ores, etc.) mainly receive the following types of services, mostly on contract basis :- (i) Excavation/drilling and removal of the overburdens (i.e. stratum, layer of mud, boulders, etc, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities are essential integral processes and are part of mining operations. As stated earlier, mining activity has been made taxable by legislation under the Finance Act, 2007 (w.e.f. 1-6-2007). Prior to this date, such activities, being part of mining operations itself are not subjected to service tax. Therefore, no service tax is leviable on such activities prior to the said date. 5. Handling and transportation of coal/mineral from pithead to a specified location within the mine/factory or for transportation outside the mine ; These activities are post-mining activities and are chargeable to service tax under the relevant taxable services, i.e., "Cargo Handling service" and "Goods Transport by Road". However, in case, such transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contractor at its own cost. The loading/unloading time will be from 6 AM to 6 PM." 10. The ld. SDR relies on para 10 of the impugned order to point out that the appellants already accept that their contract can be vivisected. It is pointed out that they have already paid service under the category of Business Auxiliary Service, Site Formation and Clearing Service and Mining Service based on such composite contract and the receiver of the service has already paid service tax on the services in the nature of Goods Transportation by Road. But the Appellants are not paying tax on cargo handling service based on the argument that the contract cannot be vivisected. 11. The Ld. SDR points out clause 2.1 of the agreement with HINDALCO according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isected. However this issue is to be examined with reference to facts of each case. 15. Nothing in the two contracts indicates that these contracts had any significant component of cargo handling other than, transportation. In the activities carried out by the appellants there appears to be a small component of loading and unloading of cargo. The contract with BALCO has an integrated rate of Rs. 485 per ton for mining, transportation, loading and unloading. In the case of HINDALCO there are two components in the compensation rate, one for mining and another for transportation. No separate activity of cargo handling is mentioned or rate specified. Obviously the component for transportation will depend on the distance of transportation. But ..... X X X X Extracts X X X X X X X X Extracts X X X X
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