Tribunal recognizes mining services contract, accepts pre-deposit, waives dues pending appeal.

The Tribunal ruled in favor of the applicant, recognizing their activity as part of a composite contract for mining services and not falling under site formation service. The applicant's fair offer of pre-deposit was accepted, and compliance with the directed pre-deposit would result in the waiver of the remaining dues, with recovery stayed during the appeal process.

---

---

Issues:
1. Waiver of pre-deposit of Service Tax and penalty under Section 78 of the Finance Act, 1994.
2. Classification of services under mining, site formation, and works contract for Service Tax liability.

Analysis:
The applicant sought a waiver of pre-deposit of Service Tax and penalty under Section 78 of the Finance Act, 1994, amounting to Rs. 2,09,31,973/-, arguing that their site formation activity is only incidental to their main service, i.e., mining service. They contended that the Department incorrectly sought to levy Service Tax on site formation service, which they believed should be classified under mining service. Additionally, they argued that their engagement was in a works contract and not commercial construction service, thus disputing the Department's classification. The applicant relied on a Tribunal decision and offered to make a pre-deposit of Rs. 9,00,000/- out of the total Service Tax liability after considering abatement for materials used.

The Department contended that the applicant's activity of boring and drilling, along with other allied works, falls under site formation service despite acknowledging the existence of a composite contract. However, the Tribunal found that the site formation activity undertaken by the applicant was indeed incidental to their main service of mining and did not qualify as site formation service based on the definition provided. The Tribunal directed the applicant to make a pre-deposit of Rs. 9,00,000/- within eight weeks, and upon compliance, the remaining dues would be waived, with recovery stayed during the appeal's pendency.

In conclusion, the Tribunal ruled in favor of the applicant, recognizing their activity as part of a composite contract for mining services and not falling under site formation service. The applicant's fair offer of pre-deposit was accepted, and compliance with the directed pre-deposit would result in the waiver of the remaining dues, with recovery stayed during the appeal process.

---