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TMI Blog2023 (9) TMI 568X X X X Extracts X X X X X X X X Extracts X X X X ..... ;Site Formation' service - The works undertaken by the Appellant as per the work order mentioned in Para 2 supra, has been rightly classified as 'Site formation Service' as defined under Section 65(97a) of the Finance Act, 1994 and liable to service tax w.e.f.16.06.2005. Accordingly, the demand of service tax along with interest as confirmed in the impugned order is upheld. Levy of penalty - HELD THAT:- It is now well settled that penalty cannot be imposed simultaneously under section 76 and section 78 of the Finance Act, 1996. Accordingly, the penalty imposed under Section 76 of the Finance Act, 1994 is set aside. Regarding the penalty imposed under Section 78 of the Finance Act, 1994, the Appellant stated that the issue is one of law. They were legally advised that the services rendered by them did not fall under the category site formation and clearance, excavation and earthmoving and demolition service and had proceeded on that basis. There was no intent or motive to evade payment of service tax - The issue involved is of interpretation in nature. No evidence has been brought on record to substantiate the allegation of intention to evade the tax. Considering ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n their grounds of appeal, the Appellant stated that they have carried out the works related to exposure of coal in all seams upto IB bottom at Basundhara (West) OCP. This means that they were not only to expose the first seam of coal, but also subsequent seam of coal below it separated by inter burden. The over burden consisted of soil alluvium, fine grained sand stone, medium grained sand stone, coarse grained sand stone and grey shale etc. as per bore hole data. Sandstone is made up of sand or quartz grains. Shale is a mix of clay, quartz and calcite. The aforesaid are minerals. While doing such work the appellant was required to comply with the provisions of various statutes including the Mines Act, 1952. Accordingly, they contended that the activities undertaken by them fall within the ambit of 'Mining Service' only, which came under service tax liability only with effect from 01.06.2007. Hence, there was no service tax liability for the above said activities carried out by them for the period prior to 01.06.2006. 4. The Appellant stated that earlier, the service of survey and exploration of minerals was brought under the service tax net with effect from September ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by which the mineral is extracted or obtained from the earth irrespective of whether such activity is carried out on the surface or in the bowels of the earth. Exposure of coal seams by removing over burden and inter burden is without a doubt an activity in relation to mining within the meaning of section 65(105)(zzzy). 6. In Circular F.No.B1/6/2005-TRU dated 27.07.2005 it was stated, inter alia, that prior to activity of mining, preparation services of site formation and clearance, excavation and earthmoving or levelling were normally undertaken for a consideration to make the land suitable for such activities. Such services include blasting and rock removal work, clearance of undergrowth, drilling and boring, overburden removal and other development and preparation services of mineral properties and sites, and other similar excavating and earthmoving services. Thus, the said circular only spoke of preparation services to make the land suitable for mining. Exposure of coal seams cannot be treated as a mere preparation service to make the land suitable for mining. Exposure of coal seams is itself mining. 7. By Circular F.No. 232/2/2006-EX.4 dated 12.11.2007 it was purported t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r stated that the decision in the case of Ramesh Construction Company v. Commissioner of Central Excise, Raipur, reported in 2017 (52) STR 291 on which the Department placed reliance has no applicability in the instant case, as in the said order the Tribunal has recorded a categorical finding that the assessee therein had made the site fit and ready for coal mining. In that case, the contract was not for exposure of coal seams. 11. The Appellant further stated that the Commissioner has erred in imposing penalty under both section 76 and section 78 of the Finance Act, 1994. It is now well settled that penalty cannot be imposed on any assessee simultaneously under section 76 and section 78. In the facts and circumstances of the case, no penalty should have been imposed on the appellant. The issue is one of law. The appellant was legally advised that the services rendered by them did not fall under the category site formation and clearance, excavation and earthmoving and demolition service and had proceeded on that basis. No intent or motive can be attributed to them in the facts and circumstances of the instant case. Neither section 76 nor section 78 has any application. There w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re extraction services for construction, geophysical, geological or similar purposes. The works undertaken by the Appellant as mentioned in Para 2 supra, clearly covered under the activities as defined in the above said definition of 'Site Formation' service. 15. It is a fact on record that the Appellant was not given the contract for extracting the minerals. The contract was only removal of over burden for exposure of coal at all seams. We observe that Board has issued Circular F.No.B1/6/2005-TRU dated 27.07.2005, explaining the scope of 'Site Formation Service', wherein it is stated that prior to activity of mining, preparation services of site formation and clearance, excavation and earthmoving or levelling were normally undertaken for a consideration to make the land suitable for such activities. Such services include blasting and rock removal work, clearance of undergrowth, drilling and boring, overburden removal and other development and preparation services of mineral properties and sites, and other similar excavating and earthmoving services. The activities under taken by the Appellant are squarely covered within the ambit of 'Site Formation Srvice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant is not in dispute. We have perused the terms of the contract and it is clear that the appellants are involved in services of site formation for the coal mines of South Eastern Coal Fields Ltd. The contention of the appellant is that these are mining services not to be taxed under site formation category. We note that the appellants do not have work order for any mining of coal. The terms of the contract are clear to the effect that they make the site fit and ready for coal mining. Coal extraction is not the work given to the appellant. As such, we find the case laws relied upon by the appellant which dealt with composite contract which involved site clearance as well as raising of ore are not applicable to the facts of the present case. As such, we find no infirmity in the orders of the lower authorities. 18. In view of the above discussion and by relying on the Board Circulars and the Tribunal decision cited above, we hold that the works undertaken by the Appellant as per the work order mentioned in Para 2 supra, has been rightly classified as 'Site formation Service' as defined under Section 65(97a) of the Finance Act, 1994 and liable to service tax w.e.f.16 ..... 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