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TMI Blog2020 (4) TMI 343X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of Service Tax 1. Handling/Transport charges received from South Eastern Coal Field3 and Mahanadi Coalfield Ltd4 for transportation of coal within mines. Rs. 3,00,17,134/- 2. Construction of shop-cum godown for Krishi Upaj Mandi Samiti Rs. 1,13,68,453/- 3. Construction of road inside the premises of BALCO, SECL, NTPC Rs. 1,50,11,016/- 4. CSEC internal road construction work provided to Prasad & Co. Rs. 6,13,030/- 5. Construction of residential houses for employees of NTPC Rs. 12,70,497/- 6. Handling/Transportation of coal within Jindal Super Thermal Power Plant Rs. 7,83,923/- Total Rs. 5,90,69,053/- 3. The appellant is engaged in various activities such as transportation of goods by road, mining activities and civil construction services. A show cause notice dated 16 October, 2012 was issued to the Appellant. The Appellant was called upon to show cause as to why: (i) Service Tax amounting to Rs. 15,27,86,616/- on taxable value of Rs. 142,40,080/- should not be recovered under the provisions of section 73 of Act; (ii) Interest at appropriate rate should not be charged and recovered from under section 75 of the Act; and (iii) penalties ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransportation of coal performed by the Noticee within the mines area as well as up to point of dispatch like the railway siding, awarded by owner of the mines like M/s SECL and M/s MCL, under GTA services. xxxxxxxx 14.1.3 So the definition of "Mines" given in the Mines Act, 1952 includes the railway siding within the ambit and scope of "Mines", therefore, all processes including handling and movement of coal from one point of mines to dispatch point of mines appear to be activities carried out "in relation" to mining of minerals, notwithstanding the fact that between the point of loading to dispatch point, some parts may not be covered within the mines. 14.1.4 The expression "mining of minerals" would have normally cover only the process of extracting coal physically. However, the definition contains the expression "in relation to mining". I accept the view that the expression "in relation to" has wider connotation. It widens and expands the scope, meaning and content of the expression "mining" so as to also attract services which do not enter directly into mining activities themselves. So it can be concluded that activities/ services in the course of mining, if integrally co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hri Radhe Tallu, learned Authorised Representative of the Department has, however, supported the finding recorded on this issue in the impugned order. 12. The taxable service defined under section 65 (105) (zzzy) of the Act means any service provided or to be provided to any person by any other person, in relation to mining of mineral, oil or gas. The Commissioner has placed reliance upon the definition of "mines" under the Mines Act, 1952 and has observed that all processing including handling and movement of coal from one point of mines to dispatch point of mines are activities carried out "in relation to" mining of minerals. Learned Counsel for the Appellant has submitted that the transport of coal within mines would not be leviable to service tax under the category of "mining services". 13. This issue was examined by the Supreme Court in Singh Transport. The issue involved was whether coal transported from pitheads of the mines to the railway sidings would fall within the taxable service defined under section 65 (105) (zzzy) of the Act. The Supreme Court held that the activity would appropriately be classified under the head "transport of goods by road service" and the activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egative list there is an exemption to services related to construction of warehouses for storage of agricultural produce but no such exemption was applicable/ existed during the relevant period of demand. Hence it is held that a value of receipt of Rs. 10,61,08,467/- from Krishi Upaj Mandi is taxable." 17. Learned Counsel for the Appellant has submitted that under the agreement with Krishi Upaj, the Appellant had to level the ground and construct godowns and shops for which purpose the Appellant was awarded a tender having a composite value of Rs. 4.75 crores, which according to the Appellant was a composite contract where the service provider was responsible for construction of shops/gowns. It would, therefore, be classified under "works contract" which was made taxable only with effect from 1 June, 2007 and, therefore, such activity could not be subjected to tax under "commercial or industrial construction" service as defined under section 65(105)(zzzq). 18. In this connection, it would be appropriate to reproduce the definition of "commercial and industrial construction" service under section 65(25b) of the Act. It is as follows: "Section 65(25b) "commercial or industrial co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scalator, fire escape staircases or elevators; or (b) construction of a new building or a civil structure or a part thereof, or of a pipeline or conduit, primarily for the purposes of commerce or industry; or (c) construction of a new residential complex or a part thereof; or (d) completion and finishing services, repair, alteration, renovation or restoration of, or similar services, in relation to (b) and (c); or (e) turnkey projects including engineering, procurement and construction or commissioning (EPC) projects;" 21. It is a fact that the contention that the activity would appropriately be classified under "works contract" and, therefore, would not be covered under "commercial or industrial construction" was not taken by the appellant before the Commissioner, but being a legal plea can be permitted to be taken. 22. In Commissioner of Central Excise, Kerala vs. Larsen & Toubro Limited 2015 (39) STR 913 (SC), the Supreme Court examined as to whether 'Works Contract' service can be classified under section 65(105)(zzzh) of the Act and held that the scope of section 65(105) (zzzh) is limited to cover contract of service simplicitor only and not a composite works contrac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on works contracts, and the measure of tax can only be on that portion of works contracts which contain a service element which is to be derived from the gross amount charged for the works contract less the value of property in goods transferred in the execution of the works contract. This not having been done by the Finance Act, 1994, it is clear that any charge to tax under the five heads in Section 65(105) noticed above would only be of service contracts simpliciter and not composite indivisible works contracts. xxxxxxx xxxxxxx xxxxxxx 24. A close look at the Finance Act, 1994 would show that the five taxable services referred to in the charging Section 65(105) would refer only to service contracts simpliciter and not to composite works contracts. This is clear from the very language of Section 65(105) which defines "taxable service" as "any service provided". All the services referred to in the said sub-clauses are service contracts simpliciter without any other element in them, such as for example, a service contract which is a commissioning and installation, or erection, commissioning and installation contract. Further, under Section 67, as has been pointed out above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IDE BALCO, SECL, NTPC 25. The findings recorded by the Commissioner on this issue are as follows: 16.1 I do not agree with the Noticee claim of exemption on construction work of road/ inside roads provided to body corporate like BALCO, SECL, NTPC. The relevant work orders show the following scope of work. xxxxxxxxxxxx 16.2 It is true that construction of road/ dam/ canal work is excluded from taxable service definition in both the categories of services i.e. "Commercial or Industrial Construction" or "Works Contract" but the said exclusion is meant to promote public infrastructure like roads/ dams/ canals which is to be used by public at large. Road is not defined in Finance Act, 2994. But as per Law Lexicon meaning of "road" as a generic term includes streets, lanes, side walk...... or passage over which the public have right of way. But in the instant cases the above mentioned companies/ body corporate awarded some construction/ repairing of road work etc. in townships, plant areas, roads leading to their mines etc, where public has limited or even no access as they are private properties meant for their own use or for employees. So I reject the claim of Noticee that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd was confirmed against the appellant under such category of taxable service. 7. On perusal of the above definition, it would reveal that construction of roads is excluded from the preview of such taxable service. The definition of taxable service does not specify the type of roads, whether private or public for the purpose of consideration of such exclusion clause. Since the definition is specific to service provided in respect of road only, in our considered view, it cannot be interpreted that only construction of public roads should get the benefit of exclusion provided in such definition clause. In other words, irrespective of the purpose of construction of the road, whether for public utility or for the utility of organization concerned for their use, the benefit of exclusion clause provided in the definition under 65(25)(b) of the Act should be available, for non-levy of Service Tax. Since there is no ambiguity in plain reading of the definition and in view of the admitted fact that the appellant had constructed roads for different commercial entities/organization, the benefit of the exclusion provided in the definition clause should be available to it." 30. Thus, it is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Counsel for the Appellant is that the said activity is not leviable to service tax since the construction of residential quarters was for personal use. 34. To examine this issue, it would be appropriate to reproduce the definition of "residential complex" under section 65 (91a) of the Act and it is as follow: "Section 65(91a) "residential complex" means any complex comprising of- (i) a building or buildings, having more than twelve residential units; (ii) a common area; and (iii) any one or more of facilities or services such as park, lift, parking space community hall, common water supply or effluent treatment system, located within a premises and the layout of such premises is approved by an authority under any law for the time being in force, but does not include a complex which is constructed by a person directly engaged any other person for designing or planning of the layout, and the construction of such complex is intended for personal use as residence by such person. Explanation- For the removal of doubts, it is hereby declared that for the purposes of this clause- (a) "personal use" includes permitting the complex for use as residence by another person on re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scope of work clearly shows that the Noticee was engaged in rendering services of shifting of coal from one place to another within the Power Plant premises, taxable under 'cargo handling services' for which the Noticee was already registered with the Department.. Accordingly, R.s 63,42,423/- is held to be taxable under the said service." 39. The Commissioner has confirmed the demand on the amount received from JPL under "cargo handling service" for coal transported within the power plant. 40. The submission of learned Counsel for the Appellant is that the Appellant was rendering GTA service since the essence of transaction was transportation of goods as would be clear from the Work Order dated 16 August, 2007. In order to examine the contentions, it will be appropriate to reproduce the Work Order given to the Appellant by SECL. It is reproduced below: "Sub: Work order for (a) (i) "Hiring of pay loaders for mechanical transfer of 06.50 lakh tes ROM (P) coal into tippers &(ii) Hiring of tippers for its transportation form Gevra Stock Heap "J" to Junnadih Rly. Siding No. 2 at Gevra Project Lead: 3-4 KMs(03.50 KMs) (b)(i) Hiring of pay loaders for mechanical transfer of 01.50 lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. In this connection, it would be appropriate to refer to a decision of this Tribunal in Jain Carrying Corporation vs. Commissioner of Central Excise, Jaipur 2019 (24) GSTL 376 (Tri.-Del.). The Bench observed that the transportation was the main activity and loading and unloading was incidental to transportation. The service rendered would, therefore, be 'transportation of goods by road' and not 'cargo handling' service. The relevant portion of the decision is reproduced as under: "24. What we find from the record, and what has also been noticed by the Commissioner, is that the cost of transportation is Rs. 29.60 per ton out of which the labour element is 10% i.e. Rs. 2.96 per ton of limestone quantity delivered, The work of loading and unloading is incidental to 'transportation', which has also been clarified by Circular dated 6 August, 2008 issued by Government of India, Ministry of Finance, Department of Revenue in regard to Service tax levy on goods transport by road services. It would be pertinent to refer to paragraph 3, which is reproduced below: 3. Issue : GTA provides service to a person in relation to transportation of goods by road in a goods carriage. The service p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erson, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it." 25. A perusal of the same shows that composite service may include various intermediary and ancillary services such as loading/ unloading, packing / unpacking etc. provided in the course of transportation of goods by road. These services are not provided as independent activity but as means of successful implementation of the principal service, namely the transportation of goods by road. It has, therefore, been clarified that a composite service even if it consists of more than one service, should be treated as a single service based on the main or principal service. It has, therefore, been held that any ancillary / intermediate service provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the Goods and Transport Agency and not by any other person. Such service would form part of Goods and Transport Agency Service and , therefore, the abatement of 75% would be available on it. It has, therefore to be seen whether in the present case transportation is the main service and loading / unloading i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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