2013 (10) TMI 341 - AT - Service Tax

Service Tax Liability: Iron Ore Transport on Road - Appellant Prevails

KBN Enterprises Versus CST. -Service Tax-Belgaum

The Tribunal ruled in favor of the appellant, finding that the transportation of iron ore within the mine and to the Railway yard falls under 'transport ... Mining Service - Mining of Minerals - Whether the transportation of iron ore in goods carriage within the mine, from mine head to the bottom plot and bottom plot, outside the mine, to the Railway yard is liable to service tax under ‘mining of minerals’ or not – Held that:- Besides undertaking transportation activity they also supplied some mining equipments to the service receiver and in respect of that service they had paid the service tax and also mining services undertaken by them. As regards transportation, each trip undertaken by the appellant was charged and the service tax liability was on the service receiver and the activity was one of transport by road and therefore there was no liability under mining service category - the reliance placed by the appellant on the circular issued by the Board which also clarifies that post-mining activity of transportation of the iron ore cannot be covered under mining service – Relying upon Indian National Shipowners’ Association vs. UOI [2009 (3) TMI 29 - BOMBAY HIGH COURT ] - activities which had direct relation to mining were covered under transport of goods by air and road was covered by separate entries - There was no separate entry for transport by sea - The fact that charter hire of vessels was brought to tax indicated that the said entry was to cover transport by sea - the appellant had made out a prima facie case for waiver and accordingly, there shall be waiver of pre-deposit and stay against recovery during pendency of the appeal – Stay granted. Issues involved: Determination of liability for service tax on transportation of iron ore within the mine and to the Railway yard under 'mining of minerals' category.Analysis:The case revolves around the question of whether the transportation of iron ore within the mine and to the Railway yard is subject to service tax under the category of 'mining of minerals.' The appellant argued that the transportation activity undertaken within the mines and to the Railway yard should not be liable to service tax based on a circular issued by the Board. The circular clarified that post-mining activities such as handling and transportation of minerals could be classified under 'cargo handling service' or 'goods transport by road.' The appellant also cited a judgment by the Hon'ble High Court of Bombay supporting this interpretation. The Commissioner, however, maintained the demand for service tax.Upon reviewing the submissions, the Tribunal found merit in the appellant's arguments. The appellant had consistently maintained that the transportation activity fell under 'transport by road,' with the service tax liability resting on the service receiver. The Tribunal noted that each trip's charge was below a specified amount, further supporting the appellant's position. Additionally, the Tribunal concurred with the interpretation of the circular by the Board and the precedent set by the Hon'ble High Court of Bombay in a similar case. The Tribunal highlighted specific observations made by the High Court regarding the scope of taxable services related to mining activities.Based on the arguments presented and the legal interpretations provided, the Tribunal ruled in favor of the appellant. A prima facie case for waiver was established, leading to a waiver of pre-deposit and a stay against recovery during the appeal process. The order was dictated and pronounced in open court, concluding the judgment.