2025 (8) TMI 1832 - AT - Service Tax

Issues: Whether supplying excavators, bulldozers and tippers with operators on hire for mining-related operations was taxable under site formation, excavation and earthmoving service or mining service, or whether it fell outside those categories and was more appropriately classifiable as tangible goods service.

Analysis: The agreement showed that the appellant was only supplying machines and tippers on hire for use by the mining company, with charges fixed on hourly, trip and tonnage bases, and the company retained control over the mining operations. The activity did not amount to the appellant itself rendering site formation or mining service. The nature of the transaction was held to be supply of tangible goods for use, and the taxing entries invoked in the demand could not be extended to cover such hire of machinery. The scope of the expression "in relation to" had to be understood by requiring a direct or proximate nexus with the taxable entry, which was absent on these facts.

Conclusion: The demand was unsustainable, the impugned order was set aside, and the appeal was allowed in favour of the assessee.

Ratio Decidendi: Mere hiring of machinery and tippers with operators for use in mining operations does not constitute site formation or mining service when the provider does not itself undertake the mining activity and the arrangement is in substance a supply of tangible goods for use.