2026 (2) TMI 669 - AT - Service Tax

Mining service classification: transportation and construction are non mining services, and limitation bars the demand where no suppression exists.

Transportation of coal and civil construction activities constitute post mining logistics and separate services rather than services 'in relation to' ... Mining service - Goods Transport Agency Services - appellant's activities of transportation of coal and civil construction work - taxable as 'mining service' u/s 65(105)(zzzy) of the Finance Act, 1994 - suppression of facts - reverse charge mechanism - extended period of limitation - normal period of limitation u/s 73(1) of the Finance Act, 1994 - HELD THAT:- The activities undertaken by the appellant are in the nature of pure transportation and civil construction work. In the impugned orders, these activities were classified under the category of “mining services” treating the same as activities undertaken “in relation to” mining. In this regard, we are of the view that the said activity of transportation of coal and construction services cannot be classified under the category of “mining services” as defined under Section 65(105)(zzzy) of the Finance Act, 1994. In fact, it is observed that the said services are appropriately classifiable under the category of “Goods Transport Agency Services Service”. In support of our view, we rely on the decision of the Hon’ble Supreme Court in the case of Commissioner of C.Ex. & S.T., Raipur v. Singh Transporters [2017 (7) TMI 494 - SUPREME COURT], wherein it has been held that transportation of coal within mines is taxable under GTA Services and not mining services. However, the impugned demand has been raised under the category of “mining service”. As the said services cannot be classified as mining services, we are of the considered view that the demand raised against the appellant under the said category cannot be sustained. We also find that the demand in respect of the first Show Cause Notice (SCN-1) is barred by limitation. The dispute in respect of the said Notice pertains to the period from 2008-09 to 2012-13 (SCN-1) whereas the Show Cause Notice was issued on 18.02.2015 i.e. beyond normal period of limitation of one year under Section 73(1) of the Act. Further, we note that the proceedings in the instant case were initiated on the basis of finding in EA 2000 Audit of the appellant’s balance sheet, profit & loss account, books of accounts, etc., and not based on any new facts. Therefore, we find that suppression of facts with intention to evade tax on the part of the appellant has not been established in this case and hence, we hold that extended period of limitation cannot be invoked in this case. Thus, by relying on the decisions cited supra, we hold that the demands of Service Tax, confirmed in the impugned orders under the category of “mining service”, are not sustainable and hence we set aside the same. As the demands of Service Tax are found to be unsustainable, the question of demanding interest and imposing penalty thereon does not arise. Accordingly, we set aside the demand of interest as well as the penalties imposed, as confirmed in the impugned orders. In the result, we set aside the impugned orders and allow the appeals filed by the appellant, with consequential relief, if any, as per law. Issues: (i) Whether the appellant's activities of transportation of coal and civil construction work are taxable as 'mining service' under Section 65(105)(zzzy) of the Finance Act, 1994 or are classifiable as goods transport agency/construction services; (ii) Whether the demand in respect of the period 2008-09 to 2012-13 (SCN dated 18.02.2015) is barred by the normal period of limitation under Section 73(1) of the Finance Act, 1994 or whether extended period of limitation could be invoked.Issue (i): Classification of services as 'mining service' versus goods transport agency/construction services.Analysis: The appellant carried out pure transportation and civil construction activities. Prior authority, including the Supreme Court in Commissioner of C.Ex. & S.T., Raipur v. Singh Transporters, and Tribunal decisions, treat transportation of coal as taxable under goods transport agency services and not as mining services. The activities in issue are post-mining/logistics in nature and constituted separate services (transportation/construction) rather than services 'in relation to' mining as defined in Section 65(105)(zzzy).Conclusion: The activities of transportation of coal and civil construction work are not taxable as 'mining service' and are properly classifiable as goods transport agency/construction services; the demand under the category of 'mining service' is unsustainable in favour of the assessee.Issue (ii): Invocability of extended period of limitation for SCN dated 18.02.2015 covering 2008-09 to 2012-13.Analysis: The proceedings were initiated based on findings from the assessee's audited books (EA-2000 audit) and not on new facts demonstrating suppression with intent to evade tax. No established suppression of facts was shown to justify invocation of the extended period of limitation under Section 73; the Show Cause Notice was issued beyond the one-year normal limitation period under Section 73(1).Conclusion: The demand in respect of the period 2008-09 to 2012-13 is barred by the normal period of limitation; extended period of limitation cannot be invoked, favourable to the assessee.Final Conclusion: The demands of service tax, interest and penalties confirmed in the impugned orders under the category of 'mining service' are set aside and the appeals are allowed with consequential reliefs as per law.Ratio Decidendi: Transportation of coal and related logistics or civil construction activities are post-mining services appropriately classifiable as goods transport agency or construction services and do not fall within 'mining service' under Section 65(105)(zzzy) of the Finance Act, 1994; demands raised beyond the normal limitation under Section 73(1) are barred where suppression with intent to evade tax is not established.