Tribunal Orders Payment of Rs. 17.00 Lakhs for Site Formation Services

The Tribunal directed the applicants to deposit Rs. 17.00 Lakhs within six weeks for services related to site formation activities. The remaining Service Tax, interest, and penalties were waived, with recovery stayed pending appeal. Compliance was required by December 7, 2009.

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Issues:
1. Whether the applicants are liable to pay Service Tax for the services provided.
2. Whether the demand of Service Tax and penalty amount should be waived.

Analysis:
1. The applicants filed for waiver of pre-deposit of Service Tax and penalty amount totaling Rs. 1,84,91,931. The demand was based on the services provided by the applicants, including Business Auxiliary Services, Cargo Handling Services, and Site Formation Services. The contention was that the mining service, which came under the scope of Service Tax from 1-6-2007, was composite with ancillary services and not separately chargeable. The Tribunal's decisions in similar cases were cited to support this argument.

2. The Revenue argued that the transportation and other charges were separately shown in the contracts, indicating separate chargeable services. Specifically, a contract dated 24-2-05 for hiring heavy machinery was highlighted, stating that the services provided were for site formation, not mining. The Tribunal found that two contracts were for mining, while the contract dated 24-2-05 was for site formation activities like drilling, blasting, loading, stacking, and dumping. The Tribunal agreed with the Revenue's contention regarding this contract and directed the applicants to deposit Rs. 17.00 Lakhs within six weeks. The remaining amount of Service Tax, interest, and penalties were waived, with recovery stayed during the appeal's pendency. Compliance was to be reported by December 7, 2009.

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