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of <h1>Tribunal grants waiver on Service Tax & penalties for mining activities.</h1> <h3>CHINDIT CARRIERS PVT. LTD. Versus COMMR. OF C. EX. & SERVICE TAX, RANCHI</h3> CHINDIT CARRIERS PVT. LTD. Versus COMMR. OF C. EX. & SERVICE TAX, RANCHI - 2011 (24) S.T.R. 407 (Tri. - Kolkata) Issues:1. Application for waiver of pre-deposit of Service Tax and penalties.2. Classification of activity as Business Auxiliary Service or Cargo Handling Service.3. Interpretation of Agreements related to coal extraction and transportation within mining area.4. Applicability of Service Tax on mining activities.5. Decision on pre-deposit and stay of recovery during appeal.Analysis:The judgment pertains to an Application for waiver of pre-deposit of Service Tax and penalties amounting to Rs. 55,07,038.00. The demand is based on the classification of the activity undertaken by the Applicant as Business Auxiliary Service and Cargo Handling Service for the period from 10-4-2004 to 24th March, 2006. The Applicant argued that the mining activity falls under the ambit of Service Tax effective from 1-7-2007, and transportation of coal within the mining area is not subject to Service Tax under Cargo Handling Service, citing a relevant Tribunal case. The Revenue contended that since the Applicant did not engage in blasting, an integral part of mining, the activity should be classified as Business Auxiliary Service involving processing of goods on behalf of others.Upon examining the Agreements related to coal extraction and transportation within the mining area, the Tribunal found that the Applicant's activities indeed fell within the scope of mining, which became taxable under Service Tax from 1-7-2007. Citing the precedent set by a Tribunal case, the Tribunal ruled that transportation of coal within the mining area is not subject to Service Tax under Cargo Handling Service. Consequently, the Tribunal concluded that the Applicant had a strong prima facie case in their favor, leading to the waiver of pre-deposit of Service Tax and penalties. The recovery of the same was stayed during the pendency of the Appeal, with the Stay Petition being allowed.In summary, the Tribunal's decision revolved around the proper classification of the Applicant's activities as mining-related services exempt from Service Tax on coal transportation within the mining area. The judgment highlighted the significance of the effective date of Service Tax applicability and the interpretation of relevant Agreements in determining the tax liability. The ruling provided relief to the Applicant by waiving the pre-deposit and staying the recovery of Service Tax and penalties pending the Appeal process.
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