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Central Excise Bhavan, Race Course Ring Road...Income Tax Office, Rajkot, Gujarat-360001 WITH i. SERVICE TAX Appeal No. 11743 of 2018 (Sardar Trading Company) ii. SERVICE TAX Appeal No.11744 of 2018 (Sardar Trading Company) iii. SERVICE TAX Appeal No. 10286 of 2020 (Sardar Trading Company) APPEARANCE:

Sh. P P Jadeja, Consultant for the Appellant Sh. J A Patel, Superintendent (Authorized representative) for the Respondent CORAM: HON'BLE MEMBER (JUDICIAL), MR. RAMESH NAIR HON'BLE MEMBER (TECHNICAL), MR. RAJU Final Order No. A/ 10978-10981 /2022 DATE OF HEARING: 26.07.2022 DATE OF DECISION:12.08.2022 RAMESH NAIR The brief facts of the case are that the appellant is engaged in providing of explosives and possessing valid license for it and the transaction of trading of 'explosives' are controlled by PESO (Petroleum and ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 ExplosivesSafety Organization,formerlyDepartment of Explosive,Government of India) and Governed by provisions of Explosive Rules, 2008. Explosives are to deal with Sold/delivered for transportation and blast use only through authorized/Registered/licensed persons under Explosive Rules, 2008. The appellant is licensed for sale and use explosive under Explosive Rules, 2008. Show Cause Notices were issued by the revenue, wherein it was alleged that supply and use of explosive to buyers at their side is amount to provision of service and the appellant has provided the taxable service of 'site formation, clearance, excavation, earth moving and demolition' services without obtaining Service Tax registration and not paid Service Tax.During initial statements of Shri Milesh D. Joshi, partner of appellant recorded under Section 14 of theCentral Excise Act, 1994. On the basis of the said statements the Revenue's allegation is that appellant was providing blasting material such asNitrate Mixtures, Detonators, Fuses, etc., to various clients on site through their certified vehicles for transport of explosives, along with trained and certified employees who were termed as 'shot- firer' who performed blasts at the site, by using the said explosives. The adjudicating Authority passed order in original wherein it was held that the appellant has provided services of 'site formation, clearance, excavation, earth moving and demolition'and consequently confirmed the demand of Service Tax,imposed penaltyand demandof interest. Being aggrieved by the orders in original appellant filed the present appeals.

2. Shri P PJadeja, Learned Consultant appearing on behalf of the appellant submits that the appellant have not provided any service of 'site formation, clearance, excavation, earth moving and demolition'. In fact they have sold explosive to the buyer on principal to principle basis. The appellant have issued invoices wherein applicable VAT i.e. 12.5 +2.5% was paid on ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 the entire value, no over and above the invoices value was charged representing any service. The appellant under legal obligation transported and delivered the explosive at the site of buyers for the purpose of blastingby use of theseexplosives'shot- firer'services was independently provided. The'shot- firer'were not on the pay rollor on the cost of the appellant as the appellant have not paid any amount to 'shot- firer'. The 'shot- firer' are also licensed under Explosive Rules, 2008. Therefore, the entire activities of the appellant is of sale of goods, hence no service is involved. The adjudication order demanded Service Tax under the head of 'site formation, clearance, excavation, earth moving and demolition'. Shri P PJadeja referred to the definition of said service as described in Section 65(a) Finance Act, 1944. He submits that firstly, the activity of the appellant pre-dominantly supply of explosive does not fall under the definition of 'site formation, clearance, excavation, earth moving and demolition'.Secondly, the said service falling under sub-clause (zzza) of Clause 105 of Section 65 of the Finance Act, 1994 was exempted under Notification No. 17/2005-S.T dated 07.06.2005. Therefore, the demand for the period prior to 01.07.2012 in any case is not sustainable. He submits that after 01.07.2012 in terms of Service under Section 65B (44) of Finance Act, 1944 under Clause a (ii), the activity such as transfer, delivery or supply of any goods, which is deemed to be a sale within the meaning of (29A) of Article 366 of Constitution does not include under the definition of service. He submits that even if it is assumed that the appellant's activities is of service but since the entire value represented the sale of the goods in terms of Clause(29A) of Article 366,the transfer of the property in goods (whether as goods orin some other form) invoked in the execution of aworks contract. Therefore, since the entire value charged by the appellant to their buyers is towards the transfer of property and goods, the activity is otherwise deemed sale, hence in terms of ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 Section 65B(44) (a)(ii), the activities of the appellant is not service and the same is not liable for Service Tax. He further submits that as per Rule 2A of Service Tax (Determinationof Value)Rules 2006 before or after 01.07.2012, value of goods was not to be included in the value of taxable service. In this case the entire amount collected to the appellant from their buyers of explosivesis against sale of goods which has been considered for demand of Service Tax and as such entire amount was to be deducted forcalculating value for Service Tax. Receipt of sale proceeds of goods from buyers was not taxable, which is decided in the case of Intercontinental Consultants And TechnocraftsPvt. Ltdby the Hon'ble Supreme Court as reported in 2018 (10)G.S.T.L 401(S.C). In case of the appellant, the entire value is for sale of the goods and not for any taxable services. He submits that the entire case was made on the basis of statements of one partner. He submits that the statement dated 02.06.2015 is not correctly or factually recorded and the same is not corroborated by any clinching positive evidences. He submits that the statementsof partner was also recorded underduress and pressure. Various statements were recorded in English,whereas partner has studiedupto only 12th in Gujarati Medium not knowing English language. Some facts shown in statements were twisted by the recordingofficer to suithis purpose, and this factwas also brought to the notice in adjudicating proceedings with a request that statements recorded in inquiry may not be used in proceedingsas circumstances and facts changes from time to time. Revenue has made baseless allegations without considering evidences in terms of provision of Section 9DofCentral Excise Act, 1944 applicable for service tax in terms of Section 83 of the Finance Act, 1944. A show cause notice has adopted the statements without examination and allowing cross examination of witness. Therefore, the said statementscannot be relied ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 uponin terms of Section 9D of Central Excise Act,1944.He relied upon the following decisions:

ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 However, the appellant submit that said "Short Firers" who conducted the blasting operations were not examined during inquiry/investigation. Statements of "Shot Firers" are not recorded at any time."ShotFirer"were not employees of appellant and as matter of fact "Shot Firers" were engaged by buyers forconducting blasting at the sites. He refers to the various affidavits of Shot Firers, the affidavits to the effect that"Shot Firers" permit has been issued after examination under taken by the Explosive Department under Explosive Rules, 2008.They are competent to carry outblasting operations with such license.For carrying out such blasting operations, they are not employees of M/s Sardar Trading Company, Morbior receiving anysalary,remunerationor Commission from them.Whenever any person purchases explosives from the said M/s Sardar Trading Company, Morbithey look for any shot firers for conducting blasting operation and such purchasers contact the appellant to conduct the blasting operations and such purchasers only take them to the blasting sitesand alsogive to the Shot Firers agreed consideration for conducting the blasting operations by the purchasers of the explosives. Appellant submits that revenue has not correctly appreciated the facts to confirm Service Tax demandsagainst the appellant. The facts are that the short firers were not the employees of the appellant and they hadcarried out the blasting operations on behalf of buyers of appellant and received payments/consideration from the buyers. The buyers of appellant had engaged qualified persons as "Shot Firers" as per Rule 2(51) of Explosive Rules, 2008; that such "Shot firers" were separately recognised and certified persons under the Explosive Rules, 2008. Thus, appellant was not providing any service to its clients/customers after carrying Explosive in its vehicle.Sales invoices/evidencessupport this fact.He submits that the activity in Trading of Explosive are under Section66D (e) of the Finance Act,1994 not attracting Services Taxliability after July, 2012.

(1) Licence for sale of Explosives.

ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 (2) Representative purchase Invoices Of Explosives by the appellant (3) Representative Sales Invoices Showing Sale Of Explosives ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 (4) Profit and loss account ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 (5)List of sale of goods in terms of sub Rule (2) of Rule 19 of Explosive Rules in form 201 A ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 (6) VAT registration issued by Government of Gujarat. (7)VAT payment challanfor sales ST/12174/2016, ST/11743/2018, ST/11744/2018, ST/10286/2020 (8)VAT returns for period upto 30.06.2017.