Custom, Excise & Service Tax Tribunal
Distributing Co. Pvt. Ltd vs C.C.E., Jaipur Ii on 4 October, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST BLOCK NO.2, R.K. PURAM, NEW DELHI 110 066 Date of Hearing 04.10.2013 Date of Pronouncement 04.10.2013 Application No.ST/MISC/57002/2013 Appeal No.ST/376/2008-CU[DB] [Arising out of Order-in-Original No.1/2008/ST/JP-II Comm, dated 95.02.2008 passed by the C.C.E., Jaipur-II] For Approval &Signature : Honble Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes M/s. Associated Soapstone Distributing Co. Pvt. Ltd. Appellant Vs. C.C.E., Jaipur II Respondent
Appearance Shri Lakshmi Narasimhan, Adv - for the appellant Shri Sanjay Jain, DR - for the respondent CORAM: Honble Justice G. Raghuram, President Honble Mr. Sahab Singh, Member (Technical) Final Order No.57992 Per Honble Mr. Sahab Singh :
This appeal is filed by M/s. Associated Soapstone Distributing Co. Pvt. Ltd. (hereinafter referred to as appellants) against the Order-in-Original No. 1/2008/ST/JP-II Comm, dated 95.02.2008 passed by the C.C.E., Jaipur-II.
2. Brief facts of the case are that appellants have provided the services of excavation and removal of rock (O/B rock / secondary ore and mining ore) at Jhamarkotra Rock Phosphate Mines of M/s. Rajasthan State Mines & Minerals Ltd. (RSMML) in terms of letter of intent dated 21.12.2003 and had not paid the service tax on these services. Investigation was taken up by the Department with reference to Contract Reference Nos. RSMM/CO/GCM(C)Cont.24/2004/74, dated 18.05.2005, RSMM/CO/GCM(C)Cont.12/2006-07/528, dated 13.10.2006 and RSMM/Phos/Tender/Mining/1/2003/5657, dated 21.12.2003 and it was found that appellants are paying service tax on the activity of excavation and removal of O/B waste in respect of contract dated 18.05.2005 and 13.10.2006 but did not pay service tax in respect of contract dated 21.12.2003 under Site Formation, Clearance, Excavation, Earthmoving and Demolition services under Section 65 (97a) of the Finance Act, 1994. Accordingly, a Show Cause Notice dated 14.09.2007 was issued to the appellants demanding service tax amounting to Rs.97,98,458/- for the period 16.06.2005 to 31.03.2007 along with interest and also proposing penalties on them. The Show Cause Notice was adjudicated by the Commissioner against the appellants vide impugned order confirming the service tax of Rs.84,85,513/- with interest and imposing penalty under Sections 76 and 78 of the Finance Act. Appellants have challenged the impugned order in the present appeal.
3. Shri BL Narasimhan, Ld. Advocate appearing for the appellants submits that the entire range of activities undertaken by the appellants is mining activity and rock phosphate ore is recovered by them for delivery to M/s. RSMML. Activities of excavation and site formation, removal O/B waste, etc. are incidental to mining and cannot be taxable separately. He further submits that this activity of excavation was done by themselves for themselves only for the ultimate purpose of mining only. He submits that it is not the case of Revenue that there are two separate contracts one for excavation and site formation and second for mining. It is a single composite contract for mining. Merely if rates are shown separately, it cannot be treated as a separate contract. He also submits that there is no suppression of facts and therefore extended period cannot be invoked and consequently penalty is also not imposable on them. He relied on the decisions of Tribunal in case of CCE vs. Vijay Leasing Company reported in 2011 (22) STR 553 (Tri.-Bang.) Ramakrishna Reddy vs. CCE reported in 2009 (13) STR 661 (Tri.-Bang.) in support of his contention.
4. Shri Sanjay Jain, Ld. Departmental Representative appearing for Revenue submits that the appellants are receiving payment as per contract separately for activity of site formation, excavation and clearance and therefore, it is not a composite contract and the Commissioner has rightly demanded the service tax on this activity under Section 65 (97a) of the Act. He submits that the decision cited by the appellants is distinguishable for the facts of the present case as amounts are separately shown for excavation and mining activity.
5. After hearing both sides, we find that issue involved is whether activity undertaken by the appellants falls under the Site Formation, Clearance and Excavation and Earthmoving and Demolition services as contended by Revenue or under Mining Service as contended by the appellants. For the sake of convenience, Section 65(97a), 65(105) (zzza) and Section 65 (105) zzzy are reproduced below:-
Section 65(97a) Site formation and clearance, excavation and earth moving and demolition includes
(i) Drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or
(ii) Soil stabilization; or
(iii) Horizontal drilling for the passage of cables or drain pipes; or
(iv) Land reclamation work; or
(v) Contaminated top soil stripping work; or
(vi) Demolition and wrecking of building, structure or road, But does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies.
Section 65 (105)(zzza) to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities.
Section 65 (105)(zzzy) to any person, by any other person in relation to mining of mineral, oil or gas; We note that activity undertaken by the appellants is excavation and removal of O/B waste and mining of ore. We also note that there is only one contract with the appellants showing the scope of work as excavation and removal of O/B waste and mining of ore. This activity starts from excavation and ends at mining of ore. We find that this is a composite activity and cannot be split into two separate parts for levy of service tax. We are supported in taking this view by the decision of Tribunal in case of M. Ramakrishna Reddy vs. CCE reported in 2009 (13) STR 661 (Tri.-Bang.) wherein it was held that removal of over burden and excavation of ore is undertaken for mining of ores only and activity does not fall under Site Formation and Excavation and Earth moving and Demolition service. Following the said decision, we hold that since the activity undertaken by the appellants is also excavation and removal of over burden and mining of ore, it is not classifiable under Site Formation, Cleaning, Excavation, Earthmoving and Demolition services.
6. In the aforesaid circumstances, we set aside the order of the Commissioner and allow the appeal. The Miscellaneous Application filed by the appellants also stands disposed of.
Pronounced in Court on 04.10.2013 (Justice G. Raghuram) President (Sahab Singh) Member (Technical) SSK -2-