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TMI Blog2024 (7) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of a civil structure, building, factory or mining area. In the present case, the activities of excavation, earthmoving, dumping etc. are done for the purpose of managing the waste and protecting the water tables / water sheds. The Commissioner has discussed the legislative intent of site formation service as brought out from the clarification issued by the Board Circular dt. 27.7.2005. The Ld. counsel has adverted to the works carried out along with the photographs to explain the nature of the work carried out at the site. The photographs placed on pages 99 to 126 of the appeal paper book filed by the assessee show various works carried out. The definition of Site Formation and Clearance, Excavation, Earthmoving and Demolition Services , excludes the services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovation or restoring of water resources or water bodies. In fact, the entire effort on the part of CMC by engaging M/s.UPL is to manage the waste and also to protect the watersheds / water bodies. The original authority in para 33.3.24 has discussed this aspect and held that the works carried out by the assessee as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urn, appointed the assessee as sub-contractor for carrying out the work orders in respect of such agreements executed with the Coimbatore Municipal Corporation (CMC, for short). The assessee furnished copies of orders given by CMC during the period from November 2007 to February 2008. On perusal of the work orders, it was revealed that the assessee had been given the work of site clearance and excavation at Vellalore compost yard for which the CMC had engaged excavators, bull dozers etc. provided by the assessee. Besides this, the assessee also did the work of site clearance, levelling, earth moving and excavation. The time given for each work order for completion of the work of site clearance and excavation at Vellalore compost yard was 1 month. The details of the 8 work orders awarded to the assessee are as under : Order No. Date Work relating to 1941/07/MD 4 21.11.2007 Engaging truck type hydraulic excavator HP online basis for the work of excavation of garbage mounds at the Vellalore dumping yard. 1941/07/MD 4 21.11.2007 Engage of track type bull dozer online basis for the work of dozing, levelling of excavated garbage of the Vellalore dumping yard. 1941/07/MD 4 21.11.2007 Enga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions, the department issued show cause notice dt. 27.08.2012 to the assessee alleging that the assessee has provided the Site Formation, Clearance, Excavation and Earth Moving and Demolition Services to the CMC and M/s.UPL and proposing to demand the service tax along with interest and for imposing penalties. After due process of law, the original authority vide order impugned herein dropped the proceedings in respect of certain work orders. However, in respect of two work orders dated 13.02.2009 and 24.03.2009, which were services of jungle clearance and site clearance, excavation etc., the original authority held that the services would fall under the category of Site Formation and Clearance, Excavation and Earthmoving and Demolition Service and demand of service tax to the tune of Rs.19,50,571/- was confirmed along with interest. The original authority imposed equal penalty under Section 78 of the Finance Act, 1994 and imposed separate penalty of Rs.20,000/- under Section 77 of the Finance Act, 1994. Aggrieved by the confirmation of the service tax demand, interest and penalties imposed, the Assessee has filed Appeal ST/41780/2014. 7. As per various work orders, the original au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 27 July, 2005 and relevant portion is reproduced below :- 6. Site formation and clearance, excavation, earth moving and demolition services 6.1 Any service provided or to be provided to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities is leviable to service tax under sub-clause (zzza) of Section 65(105) of the Finance Act, 1994. Site formation and clearance, excavation and earthmoving and demolition has been defined in clause (97a) of Section 65 of the Finance Act, 1994. 6.2 The definition of site formation and clearance, excavation and earthmoving and demolition is an inclusive definition and the activities specifically mentioned are indicative and not exhaustive. Prior to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes, preparation services of site formation and clearance, excavation and earthmoving or levelling are 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 remo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... site for exploitation of the vacant ground so recovered or of the resources beneath the earth, like construction of building/factories any civil structure. The aim is to recover or prepare, or work on a site to make it ready for some revenue yielding exploitation. However, the Government has thought it fit to exclude from its scope similar services when made in relation to construction of roads, airports, railways, transport terminals, dams, ports etc. Thus, the Government has intended to keep out activities which are in the nature of infrastructure and public utilities providing of which are the essential job of statutory authorities, even if some of them may yield huge revenue like Railways, Transport Terminals, Air Ports, Sea Ports. 8.9 In terms of Mega Exemption Notification No.25/2012-ST dated 20.6.2012 [Sl.No.25(a)] services provided by a local authority by way of carrying out any activity in relation to any function ordinarily entrusted to municipality in relation to water supply, public health, sanitation conservancy, solid waste management etc., is exempted from service tax. Thus, the legislative intent is clear and explicit. 8.10. The Commissioner erroneously confirmed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rks Contract Service and not under Site Formation and Clearance, Excavation and Earthmoving and Demolition services and therefore classification adopted in the show cause notice is incorrect. Hence the entire demand is not sustainable. Once the demand is not sustainable, the penalties imposed are also not correct. 8.15 Without prejudice to the above submission, the issue involved is one of interpretation and therefore does not call for invoking larger period of limitation. The appellant has done a meritorious job in alleviating the problems faced by the local residents of that area and the same should be taken into consideration. The appellant need not be given bouquets but at least let him not get brick bats in the form of demand invoking larger period, alleging suppression of facts with intent to evade payment of tax. All figures were taken from the documents furnished by assessee when called upon by department. There is no suppression on the part of appellant. The appellant was under bonafide belief that the work undertaken by CMC is Municipal Solid Waste management and not taxable. There was no intention to evade tax. 8.16 Without prejudice to the above submission, it is submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation which is to be carried out by assessee. The activities involved were cutting, shifting, transporting, dumping, filling, dozing, compacting, reformation, complete and levelling of Municipal Solid Waste using required machineries, gravel filling, earth work embankment, mixing of bentonite and providing and spreading of soil liner system, providing supplying of liner system, providing supplying and laying of C D materials, MSW layer 200 mm C D, 600 mm clay layer, 150mm C D, providing and supplying and laying 300 mm soil above 200 gsm geo textile layer, providing/supplying 300 mm solid above 200 gsm geo textile layer, constructing path way along with periphery of the dumpsite as per drawings, constructing storm water drain along with periphery of the road; all the items of work mentioned in the work orders were related to waste reformation and are not classifiable under Site Formation and Clearance, Excavation and Earthmoving and Demolition service. 10.3 It is submitted that the original authority has arrived at this conclusion on the basis of the exclusion clause in the definition of Site Formation Servies . In terms of the concession agreement made between CMC and M/s.UPL wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Management Services as it satisfies the ingredients under Site Formation Service. 10.8 The argument put forward by the ld. Counsel that as these are services provided to municipal corporation in relation to waste management, these are nothing but part of statutory sovereign function discharged to the public and therefore is not subject to levy of service tax, was countered by the Ld. A.R by submitting that such services do not fall under the sovereign function as the work orders have been given by the CMC to M/s.UPL who have subcontracted the work orders to the assessee herein. 10.9 In regard to invocation of extended period, the Ld. A.R submitted that the assessee has not discharged service tax and non-payment of service tax would not have come to light but for the investigation conducted by the department. It is clear suppression of facts and the demand raised invoking the extended period is correct and proper. Ld. A.R prayed that assessee s appeal may be dismissed and Department s appeal may be allowed. 11. Heard both sides. 12. The original authority vide order impugned herein has set aside the demand in respect of 8 contracts of Coimbatore Municipal Corporation as narrated i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that though the words excavating , earthmoving are used in the work order, the nature and character of the works executed are management of waste and not site formation for the purposes of construction of a building, factory or civil structure. The proposal and object of carrying out the work orders is solely for management of waste and not for preparation of the land for construction or such other purposes. 15. The scope of the site formation and clearance services has been explained by the Board vide Circular No. B1/06/2005-TRU dated 27.07.2005. The said circular captures general situations where site formation and clearing activities take place. The circular says that prior to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes, any preparation of land would be construed as site formation and clearance service. Thus, when the intention of the activities carried out by excavation, clearance, drilling etc. is to make the land suitable for further use. The excavation, clearance, earthmoving and other like activities would be SFCE. In the present case, the activities of excavation, earthmoving, dumping etc. are done fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he land was reformed from all sides by compacting with rollers to give stability to the top structure. A slope was formed and drainage liner is laid over the garbage which is compacted. This drainage liner is to circulate gases formed inside the garbage and collect it through perforated pipes fitted in intervals throughout the structure. Over this drainage liner, 600 mm clay soil is laid and compacted. This creates impermeability to prevent rain water from seeping within the compacted structure so as to minimize the contamination of water. Over this liner again drainage liner / gravel liner is laid and compacted. Over the said liner, 200 GSM non-woven geo textile is spread and stitched without gaps over the entire structure. Over this geo textile garden soil around 300 mm is laid and compacted to plant specified grass to form a layer. This grass roots create tangles all over this structure and gives stability for the top structure. It also gives greenery and friendly atmosphere to the village. From the photographs as well as the illustrative explanation attached to it, it is very clear that the works carried out is for waste management and for protecting water tables / water resour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anure. 19. The definition of Site Formation and Clearance, Excavation, Earthmoving and Demolition Services , excludes the services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovation or restoring of water resources or water bodies. In fact, the entire effort on the part of CMC by engaging M/s.UPL is to manage the waste and also to protect the watersheds / water bodies. The original authority in para 33.3.24 has discussed this aspect and held that the works carried out by the assessee as per the work orders of CMC as well as M/s.UPL would fall under the exclusion part of the definition. 19.1 As per work order dt. 9.1.2010 certain Earth Moving Machineris are hired. These machineries are used for work orders relating to these garbage dump yards. 20. After carefully examining the work orders and considering the submissions of both sides, we are in full agreement with the view taken by the Commissioner in setting aside the demand in respect of 8 work orders of CMC as well as 7 work orders of M/s.UPL and hiring of machineries. 21. We therefore hold that the order passed by the Commissioner setting aside the demand of Rs.64,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not as part and parcel of the waste management system. Ld. Counsel has submitted that these works of jungle clearance, levelling, excavation, earth filling, providing and fixing RCC pre cast slab, trenches for laying the pipes etc. are done as part and parcel of the waste management system to protect the water tables / water bodies. Without clearing of the bushes and vegetation and laying the precast slab for pipes, drainage etc., the appellant cannot carry out the work of waste management as per the project. It would require necessary dressing, levelling of the land, excavation and drainage layer etc. in order to treat and manage the waste scientifically. These works are indispensable activities so as comply to the Municipal Solid Waste Management Rules. The assessee has to comply with the rules and procedures of the Municipal Solid Wastes (Management and Handling) Rules, 2000. The works being part and parcel of the entire contract taken up by M/s.UPL who are pioneers in environmental engineering and waste management, it is argued that Commissioner ought not to have confirmed the demand of service tax on these two work orders. 24. After perusal of the work orders and the natur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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