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TMI Blog2025 (4) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... , show-cause notice was issued and the Commissioner in the impugned order observing that the above service was nothing but processing of ore essential for marketing the extracted ore, classified the same under Business Auxiliary Service and confirmed the demands invoking suppression and also imposed penalty under Section 77 and 78 of the Finance Act, 1994. Aggrieved by this order, the appellant is in appeal before us. 3. The Learned Counsel for the appellant submitted that admittedly they are rendering screening and grading of iron ore service. The appellant is into mining operations and the above service is one of the mining services. He submits that with effect from 01.06.2007 vide Section 65(105)(zzzy), 'mining services' was introduced where mining services was defined as 'any service provided or to be provided to any person, by any other person in relation to mining of mineral, oil or gas'. It is further submitted that the word 'mining' since not defined in the Finance Act, 1994, the same needs to be derived from the Mines Act, 1952 and the Mines and Minerals (Development & Regulation) Act, 1957 (MMDRA). As per the definition of mining operations as defined under Section 3(d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence, the Commissioner has rightly confirmed the service tax amount invoking suppression. Relies on the decisions rendered in the case of Commissioner of Central Excise, Vishakapatnam vs. Dr. Mukundakam Sharma (S.C.) and Commissioner of Central Excise Surat-I Vs. Neminath Fabrics Pvt. Ltd. 5. Heard both sides. The fact that the appellant is engaged in providing services of screening, grading of iron ore is not disputed, the only dispute is whether these services fall under 'Business Auxiliary Service' as alleged by the Revenue or under 'Mining Services' as claimed by the appellant. The claim of the Revenue is to classify them under para '(v) Production or processing of goods for, or behalf of, the client' which is part of the definition of 'Business Auxiliary Service' as per the Section 65(19) of the Finance Act, 1994. 'Mining services' as per Section 65(105)(zzzy) was defined as 'taxable services means service provided or to be provided to any person, by any other person in relation to mining of mineral, oil or gas'. 6. The Board vide letter dated 28.02.2007 reproduced below referring to the newly introduced 'Mining Services' observed as follows: Budget 2007-2008 - Changes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. With this, services provided in relation to both exploration and exploitation of mineral, oil or gas will be comprehensively brought under the service tax net. 6.2.1 The trend is to outsource part or whole of the mining activities. Since exploration and mining of mineral, oil or gas are comprehensively brought under the service tax, field formations may undertake necessary action. The following activities of the appellant are proposed to pay taxes under Business Auxiliary Service: (a) To liaison with SCCL and receive/take delivery of raw coal i.e. as per the schedule. (b) To undertake all incidental/auxiliary services such as permits, clearances, liaison with Railway authorities organize railway siding at the loading points. (c) To ensure that the wagons are not overloaded and supervise the transportation by keeping themselves apprised and be thoroughly conversant with the Rules and regulations of Railway/coal companies and any other related agencies. (d) To ensure dispatch of coal and to comply with the documentation formalities and prescribed procedure of Railway. (e) To undertake cleaning, washing, screening and sizing of coal. (f) To arrange for delivery of b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od the activity carried out by the appellant would not be liable to service tax as mining service. 16. Once it is established that the activity of the appellant is mining,, it cannot be taxed under the Business Auxiliary Service for the period prior to 1-6-2007. Even when we examine the definition of business auxiliary service, it is seen that production which does not amount to manufacture comes under business auxiliary service. The beneficiation of coal does not amount to production of coal because beneficiation is a process, which enhances the quality of the coal. However, in the definition of business auxiliary service, an amendment was carried out to include process also w.e.f. 16-6-2005. The appellant has made an alternative submission that if the activity carried out by them is not considered as mining activity the demand can be sustained only from 16-6-2005 to 31-8-2005 only. There are sufficient grounds to hold that the activities carried out by the appellant amounts to mining service. When such a view is taken, the appellant would not at all be liable to service tax for a period prior to 1-6-2007... ". 7.1 The CESTAT, Principal Bench, New Delhi Global Coal & Mining Pvt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilar manner. In all the enactments relating to coal mining, washing of coal has been treated as part of the mining activity. As laymen we tend to think that mining means only digging deep into the earth and extracting the minerals. However, in the statutory provisions the definition of mining appears to be very wide. In the Colliery Control Order Section 2(c) defines 'Colliery'. 'Colliery' means any mine or open working where winning or extraction of coal is the principal object of the mining, quarrying or any other operation carried on therein, and includes a plant for the production of coke or for the washing of coal. When the ash content of the coal is very high, the quality is poor. The Mines and Minerals (Development and Regulation) Act, 1957 in the Second Schedule gives the different gradations of coal. Among the gradation, washery grade is clearly indicated. From all this, it is clear that washing of coal is also a part of mining activity. 15. 16. Once it is established that the activity of the appellant is mining, it cannot be taxed under the Business Auxiliary Service for the period prior to 1-6-2007. Even when we examine the definition of business auxiliary service, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for piloting big vessels in and out of the harbour and for husbanding main fleet. They give vessels on time charter basis to oil and gas producers to carry out offshore exploration and production activities. The right of possession in and effective control of such machinery, equipment and appliances is not parted with. Therefore, those activities clearly fall in entry (zzzzj) and the services rendered by the members of the 1st petitioner have been specifically brought to the levy of Service Tax only upon the insertion of this new entry. 38. If the Department's contention is accepted that would mean that the activities of the members of the 1st petitioner are covered by entry (zzzy) and entry (zzzzj). Such a result is difficult to comprehend because entry (zzzzj) is not a specie of what is covered by entry (zzzy). Introduction of new entry and inclusion of certain services in that entry would presuppose that there was no earlier entry covering the said services. Therefore, prior to introduction of entry (zzzzj), the services rendered by the members of the 1st petitioner were not taxable. Creation of new entry is not by way of amending the earlier entry. It is not a carve out of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a new service 'in relation to mining' was introduced with effect from 1 June, 2007. The Department admits that with effect from 1 June, 2007, the activity carried out by the appellant is covered under the category of service in relation to mining. This activity could not, therefore, have been categorized under BAS prior to 1 June, 2007. 22. Thus, the demand of Service Tax in the impugned order under BAS from 16 June, 2005 to 30 May, 2007 is not justified. 23. What is, however, disturbing is the manner in which the three binding decisions of the Tribunal, on which reliance was placed by the appellant, were not followed by the Principal Commissioner. After noticing the decision of the Tribunal in Aryan Energy and the fact that the position of law was reiterated by the Tribunal in Spectrum Coal and Aryan Coal, the Principal Commissioner ignored the binding decisions for the reason that the Department had filed an appeal against the decision of the Tribunal in Aryan Coal before the Delhi High Court and though the appeal filed by the Department was dismissed by the Delhi High Court on 25 February, 2014, but the Civil Appeal filed by the Department was dismissed by the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X
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