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TMI Blog2017 (11) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd. (NBCC) as a sub-contractor for construction of staff dormitory consisting of 54 units. 2. A show cause notice dated 13.02.2008 was issued proposing demand of Service Tax along with interest and imposition of penalty on the basis of the said contracts. The appellants submitted a reply to show cause notice and appeared in personal hearing before the Commissioner of Service Tax Commissionerate, Kolkata. 3. By the impugned order, the adjudicating authority confirmed the demand of Service Tax of Rs. 14,47,56,518/- along with interest and imposed penalty of equal amount of tax under section 78 and a penalty of Rs. 1,000/- under section 77 of the Finance Act, 1994. The break-up of demand of Service Tax is as under :- Sl. No. Category of Service Relevant Sec. Period of Demand Service Tax Demanded (Rs.) 1. Cargo Handling Services 65(23) & 65(105)(zr) 16-08-2002 to 31-03-2007 7,53,85,202 2. Site Formation Services 65(97a) & 65(105)(zzza) 16-06-2005 to 31-03-2007 5,01,90,539 3. Cleaning Services 65(24b) & Sec. 65(105)(zzzd) 16-06-2005 to 31-03-2007 1,56,40,810 (paid Rs. 2,03,476/- on CHP Maintenance Work NOT Disputed) 4. Construction of Residential Comple ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng of coal into railway wagon and loading and transportation of coal undertaken by the appellant would be classified under the Cargo Handling Service as defined under section 65(23) of the Act, 1994. 5.3 For the proper appreciation of the case, the definition of the Cargo Handling Service as it stood during the relevant period is reproduced below:- [(23) cargo handling servicemeans loading, unloading, packing or unpacking of cargo and includes,- (a) cargo handling services provided for freight in special containers or for non-containerised freight, services provided by a container freight terminal or any other freight terminal, for all modes of transport and cargo handling service incidental to freight; and (b) service of packing together with transportation of cargo or goods, with or without one or more of other services like loading, unloading, unpacking, But does not include, handling of export cargo or passenger baggage or mere transportation of goods;] 5.4 The expressions loading, unloading, packing or unpacking of cargo in the main part of the definition of Cargo Handling Service, make it clear that the loading, unloading, packing or unpacking of cargo would be levi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndling service provided by such entities attract the levy service tax. Section 65(23) has a wide amplitude and has brought all like nature activities of its fold expressly and by inclusion of such like nature activities under the class cargo handling services. However classification of service under this category is subject to two exceptions/exclusions: viz.,: (1) handling of export cargo or passenger baggage and (2) mere transportation of goods. These two activities are beyond the scope of such class from taxation for rationale behind them. Accordingly, cargo handling services provided in respect of domestic cargo only are liable to tax. Event of levy arises when service relating to or in relation to handling of cargo is provided by a cargo handling agency irrespective of mode of transport used for movement of such cargo. Precisely, following activities which are contemplated to be taxed as cargo handling service are: (1) By express terms : (A) Loading, unloading, packing or unpacking of cargo; (2) By inclusion terms; (B) Handling service relating to cargo; (i) Provided for freight in special containers or for non-containerised freight; (ii) Provided by a container fre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Service, we are of the opinion that in the present case these agreements/contracts are for loading of coal into wagons in the railway sidings and loading and unloading are of predominant nature. It would come within the purview of the definition of Cargo Handling Service. 5.7 The ld.Counsel for the appellant strongly relied upon the decision of the Tribunal in the case of Sainik Mining & Allied Services Ltd. v. Comm. of C.Ex., Cus & S.T., BBSR [2008 (9) S.T.R. 531 (Tri.-Kolkata)]. It is contended by the appellant that the activities undertaken by them are within the mining area and would not fall under the category of Cargo Handling Service. We find that in the said case, the activities undertaken are principally the transportation of coal. In the present case, the ld.Commissioner observed that on perusal of the description of work in the work orders, it is found that loading, unloading of coal mechanically, i.e. handling aspect is very much prominent. We agree with the findings of the ld.Commissioner. 5.8 The ld.Counsel for the appellant submitted that there is a composite price of loading and transportation of goods. In this context, the ld.Commissioner referred to the Board ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hing of coal (benefication) are treated as part of mining activity and mining service came into effect from 01.06.2007 and set aside the demand under the category of Business Auxiliary Service. The relevant portion of the said decision is reproduced below:- "15. It was also held that the coal that is extracted from the coal mine is crushed into pieces and thereafter it is washed to remove its impurities and ash contents to make the coal fit for sale. After the coal is washed, it assumes the form of coke, which is sold to consumers. The washery, wherein the process of washing coal is carried on, for the purpose of preparing the coal for sale is an integral part of a mine as it involves ancillary process. Washery is included within the definition of mine under the Mines Act, 1952. In the decision of the Apex Court in the case of State of West Bengal v. Kesorm Industries & Others - 2004 (10) SCC 201, the Apex Court has observed that the definition of mineral is wide. Coal washing plants or coking coal or quarries coal mines and washed coal slurry, and cokes of different grades would also come within the definition of coal. In view of the above observations we are of the considered v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the excavation and removal of over-burden is an integral part of the mining activity and it is in relation to mining of mineral and taxable under section 65(105)(zzzy) as mining of mineral service w.e.f. 01.06.2007. 7.2 The adjudicating authority observed that ECL and BCCL awarded the works to the appellant of excavation and removal of over burden. It is observed that from the tender notice/letter for award of work that the items of work included excavation in all kinds of soil at any depth by mechanical means, removal of slurry and mud, transporting and unloading the excavated materials mechanically and disposing of the same outside the working zone in the dumping yard. The adjudicating authority relied on CBEC instruction letter dated 12.11.2007. 7.3 The definition of Site Formation And Clearance, Excavation and Earth Moving and Demolitionunder section 65(97a) is reproduced below:- [(97a) site formation and clearance, excavation and earthmoving and demolitionincludes, - (i) drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or (ii) soil stabilization; or (iii) horizontal drilling for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rendered by the assessee is mining, which is introduced w.e.f. 01.06.2007. 7.6 In the present case, we find from the works order that the blasting will be done by Department of Explosives and the excavation work will be done by the appellant in the nature of extraction of coal mechanically in benches from available coal at any depth. Therefore, it is an integral part of the mining job and we agree with the submission of the appellant. 8. Cleaning Service : 8.1 The ld.Counsel submitted that the appellant is merely loading/lifting Ash from the Ash ponds, transporting it upto a distance of 25 Kms. and unloading the same at the abandoned mines of ECL. It is further submitted that the contract is essentially for transportation of Ash and not for rendering any cleaning activity. The ld.Counsel fairly submitted that they are not contesting the amount of Rs. 2,03,476/- on CHP maintenance work against cleaning service, which they have already paid. 8.2 The adjudicating authority observed that the appellant was allocated work by Damodar Valley Corporation (DVC) for removal of technological waste from CHP area, DTPS and it would come under cleaning service. It is further observed that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... awarded the work of construction of staff dormitory (One No.) including the work of internal water supply and sanitation at NTPS, DVC, Mejia. The construction of complex is defined under section 65 (30a) of the Act, 1994 as under:- [(30a) construction of complex means (a) construction of a new residential complex or a part thereof; or (b) completion and finishing services in relation to residential complex such as glazing, plastering, painting, floor and wall tiling, wall covering and wall papering, wood and metal joinery and carpentry, fencing and railing, construction of swimming pools, acoustic applications or fittings and other similar services; or (c) repair, alteration, renovation or restoration of, or similar services in relation to, residential complex;] 9.4 We find from the impugned order that the appellant constructed a building consisting of 54 individual units of Bachelor accommodation having one room with kitchen space and attached Bathroom in each unit. This fact was not disputed by the appellant. It is not a case of construction of one residential unit. Therefore, it would come within the purview of definition of complex and the demand of Service Tax is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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