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TMI Blog2016 (8) TMI 675X X X X Extracts X X X X X X X X Extracts X X X X ..... ems supplied by Hindustan Zinc Limited in the taxable value Held that:- in such situation the activities of site formation and clearance are to be treated as an activity ancillary to mining and since the overall contract for mining the contract being indivisible the same should be treated as mining contract. It was also held that w.e.f. 01/6/2007 when the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/2007 the same activity cannot be classified under site formation service. Value of free supply items cannot be held to be charge for services provided by the appellant. Hence following the ratio of decided cases we find the impugned order cannot be sustained on this ground a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the demand of service tax of ₹ 72,73,737/- and imposed penalty of equivalent amount under Section 78 and also penalty under Section 76 of Finance Act, 1994. 2. The learned Counsel appearing for the appellant submitted mainly on the following grounds : (a) by examining the scope of the work undertaken by the appellant as available in the tender documents it is clear that the appellants have entered into composite contract involving various work like drilling, cross cutting, conventional raising, ramp excavation, long hole blasting, withdrawal of blasted ore etc. w.r.t. underground mines already in operations with Hindustan Zinc Limited. All these activities are relating to mining of ore and cannot be considered as site formation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng to service tax applicability to mining sector the clarification was issued after obtaining feed back from the stake holders. In such situation there cannot be any allegation of suppression on the part of the appellants. As such the penalty imposed is not sustainable. 3. The learned AR contested the submissions of the appellant mainly on the following grounds : (a) the appellants were engaged in excavation, drilling, construction of ramp which are all relatable to activities of site preparation for ore' extraction. Such activity can be correctly classified for service tax under site preparation; (b) the appellants did not take registration for purpose of discharging service tax for such work in 2005. Their information to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the impugned order cannot be sustained on this ground. 5. Regarding inclusion of value of free supply items for service tax purpose the matter has been settled by the Larger Bench of the Tribunal in Bhayana Builders (P) Ltd. vs. CST, Delhi (supra) and in Karamjeet Singh Co. Ltd. vs. CCE, Raipur reported in 2013 (32) S.T.R. 740 (Tri. - Del.) and AMR India Ltd. vs. CCE, CUS ST, Hyderabad - II reported in 2015 TIOL - 2834 - CESTAT - BANG. It has been held that value of free supply items cannot be held to be charge for services provided by the appellant. Hence following the ratio of decided cases we find the impugned order cannot be sustained on this ground also. 6. Regarding the service tax payable by the ap ..... X X X X Extracts X X X X X X X X Extracts X X X X
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