Mining activity and ROM processing supported waiver of pre-deposit and stay against service tax recovery

Excavation and transportation of run of mine material within the mining area, together with conversion of ROM into finished product, was treated as part of mining activity. The service tax demand related to a period before mining service was brought into the service tax net from 1-6-2007, which supported the appellant's prima facie case against the demand. The exemption claim under Notification No. 8/2005-S.T. was also relied on for the processing activity undertaken on goods supplied for further manufacture. On that basis, pre-deposit of service tax, interest, and penalty was waived and recovery stayed during the appeal.

---

---

Issues: Whether the appellant made out a prima facie case for waiver of pre-deposit and stay of recovery in relation to the service tax demand arising from mining-related excavation, transportation, and conversion activities.

Analysis: The contract was for excavation and transportation of run of mine material within the mining area, along with conversion of ROM into finished product of desired sizes. Transportation within the mining area was treated as part of the mining activity, and mining service was noted to have come within the service tax net only from 1-6-2007. On the facts placed, the demand covered a prior period. The exemption claim under Notification No. 8/2005-S.T. was also referred to in support of the plea that the processing activity was undertaken on goods supplied for further manufacture.

Conclusion: The appellant established a strong prima facie case. Pre-deposit of service tax, interest, and penalty was waived and recovery was stayed during pendency of the appeal.

---