Custom, Excise & Service Tax Tribunal
M/S Sadbhav Engineering Ltd vs Commissioner Of Service Tax, Ahmedabad on 22 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
Appeal No.ST/148/2008
[Arising out of OIO No.STC/07/Commr/Ahd, dt.03.06.2008, passed by Commissioner of Central Excise & Service Tax, Ahmedabad]
M/s Sadbhav Engineering Ltd Appellant
Vs
Commissioner of Service Tax, Ahmedabad Respondent
Represented by:
For Appellant: Shri Jigar Shah, Advocate For Respondent: Dr. J. Nagori, A.R. (Additional Commissioner) For approval and signature:
Mr.Justice G. Raghuram, Honble President Mr.P.M. Saleem, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen the order?
4. Whether order is to be circulated to the Departmental Yes authorities?
CORAM:
MR.JUSTICE G. RAGHURAM, HONBLE PRESIDENT MR. P.M. SALEEM, HONBLE MEMBER (TECHNICAL) Date of Hearing/Decision:22.02.2016 Order No.A/10114/2016, dt.22.02.2016 Per: Justice G. Raghuram Heard the learned Counsel for the Appellant/Assessee and the learned Departmental Representative for the Respondent/Revenue. Appeal is preferred against the Adjudication order dt.03.06.2008 passed by the learned Commissioner, Ahmedabad. The order confirmed service tax demand of Rs. 63,68,413.00 and penalty of equivalent amount under Section 78 and penalty under Section 76 of Finance Act, 1994. The impugned order does not order levy of interest nor of penalty under Section 77 of the Act.
2. During the course of Adjudication proceedings, the Appellant herein did not contest the classification of service as alleged by the Department. It merely pleaded that there was no malafide intention in not remitting the tax and therefore, neither interest nor penalty should be levied. In the circumstances, the impugned order while negating the plea for eschewing liability to penalty, confirmed the classification as alleged in the Show Cause Notice dt.27.11.2007 and confirmed the liability to tax alongwith penalties, as already specified. By a Miscellaneous Application filed in this appeal, the Appellant raised additional grounds contesting the classification of the services and as confirmed in the Adjudication order. This application to raise additional grounds was ordered on 22.02.2016, since the grounds raised were pure questions of law.
3. During the period 15.06.2005 to 28.02.2006, the Appellant under an agreement entered into with M/s Gujarat Heavy Chemicals Ltd, (GHCL for short), a corporate entity, provided services which included hiring of heavy earth moving equipment for excavation and allied works at the Khadsaliya Lignite Mines. Under the variety works agreed to be executed for GHCL, Appellant was inter alia required to remove, within a period of 3 years, about 80 lakhs Cub. Mtrs of Over Burdens and about 5 lakhs MTs of Lignite. The predominant character of the services provided by the Appellant to GHCL is therefore mining of lignite. The Appellant was filing returns and remitting service tax under the category of mining service w.e.f. 01.06.2007 in view of introduction of mining service as a taxable service with effect from the said date, defined and enumerated in Section 65(105)(zzzy) of the Act.
4. As the Appellant neither filed returns nor remitted service tax prior to 01.06.2007, proceedings were initiated for levy of service tax on the premise that the Appellant had provided site formation and clearance, excavation and earth moving and demolition service enumerated under Section 65(97)(a) read with Section 65(105)(zzza) of the Act.
5. As already noticed the Appellant did not contest the classification during departmental adjudication. The challenge to the classification confirmed in the impugned order has been urged only in the appeal before us. As the validity of the classification of the service is a factor integral to the legitimacy of levy and collection of tax, we have allowed the miscellaneous application for raising additional grounds and we consider the factual matrix of the Appellants rendition of service in the context of the two competing services site formation etc. and mining service.
6. On a true and fair construction of the matrix and bouquet of service provided by the Appellant, considered in the light of the two taxable services i.e. site formation on the one hand and mining on the other, and applying the provisions of Section 65A of the Act, the conclusion is compelling that since the essential character of the services provided by the Appellant is mining of Lignite and removal of Over Burdens is an activity incidental to facilitate and effectuate mining of lignite and as the quantum of lignite mined is also, under the schedule of quantities of the agreement between the Appellant and GHCL is predominantly, the contract should be considered in essential character as a contract for mining of lignite. On this reasoning, the service provided by the Appellant to GHCL clearly and undisputedly falls within the ambit of mining service and cannot be classified as site formation etc service. The judgment of this Tribunal in Associated Soapstone Distributing Co. P. Ltd Vs CCE Jaipur-II - 2014 (34) STR 865 ((Tri-Del) is clearly supportive of the conclusion that the service provided by the Appellant cannot be classified as site formation service is classifiable only as mining service.
7. On the above analysis, the impugned order invites invalidation. We accept the invitation and allow the appeal. The impugned order is quashed. No costs however.
(Dictated & Pronounced in open court) (Justice G. Raghuram) President (P.M. Saleem) Member (Technical) cbb ??
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