TaxTMI 
TaxTMI 
2014 (3) TMI 79
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....moval of the over burden and raising of saleable lignite from Matasukh Mines located at Jayal Tehsil, Nagaur District, Rajasthan. The payment for the services provided by the appellant, in terms of Section VII of the agreement, was on the basis of per M.T. of saleable ignite mined by them. Inquiry in respect of their activity was initiated by the Department sometimes in the year 2007 and the appellant under their letter dated 09/3/07 informed the Department about their activity, pleading that the services provided by them were not taxable services. In their letter to the Department, they emphasized that they receive payment from RSMML in terms of their agreement for the quantity of lignite mined and not for other activities like removal of over burden or excavation of top soil. Subsequently, the Department taking a view that the activity of the appellant was taxable as 'cargo handling' service under Section 65 (105) (Zr) of the Finance Act, 1994 till 15/06/05 and thereafter from 16/06/05 to 31/05/07 their activity was taxable as 'site formation and clearance, excavation and earth moving service' under Section 65 (105) (ZZZa) ibid and w.e.f. 01/6/07 their activity was taxable as min....
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....e than 2500 kcal per kg. into trucks placed for transportation of the same, respreading the top soil removed on stablised outside dumps, Allied and prepatory works, dewatering and pumping out of water from the pits to keep the same dry, taking measures against fires and spontaneous heating of lignite and quality control of the lignite, that from the scope of work as described in Section V of the appellants agreement, it is clear that the agreement is for mining of lignite, that from Section VII of the agreement it will be seen that the appellant are paid on the basis of per M.T. of saleable lignite loaded, that the appellant's contract with their client - RSMML is for mining, that mining became taxable only w.e.f. 01/6/07 by insertion of Clause 65 (105) (ZZZy), that though the work of mining of lignite of the required calorific value also requires clearing the top soil and removing the over burden, the predominant feature of the appellants contract with their clients is mining and hence the service performed by them has to be treated as mining, that the appellant are not paid for clearing the top soil or removing of over burden separately and they are paid only on the basis of th....
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....nder with intent to evade the duty and for the same reason, penalty under Section 78 of the Finance Act, 1994 would not be attracted, that in this regard mere failure to take registration or non-filing of return or non-payment of service tax cannot be treated as the basis for concluding deliberate withholding of information or deliberate contravention of the provisions of the law to evade the payment of service tax and that in view of the above, the impugned order is not sustainable. 4. Shri Amresh Jain, the learned DR, defended the impugned order by reiterating the findings of the Commissioner and emphasized that even for the period prior to 01/6/07, the activity of the appellant was taxable, that during period till 15/6/05, the appellant's agreement with RSMML refers to loading of lignite of the desired quality into the trucks placed for transporting the same, that this indicates that there was handling of the lignite in the mines, which was meant for transportation to its destination, that since separate value of the handling and movement of lignite within the mines was not given, the Commissioner has correctly demanded service tax on the entire amount of remuneration, that h....
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.... after removal of over burden, loading of lignite having calorific value more than 2500 kilo per kg. into the trucks placed near the pits for transporting the same, other allied work, quality control of the mined lignite etc. and for this job, they were to be paid on the basis of the quantity of the lignite of the desired quality produced. The rate at which the remuneration was payable to the appellant was on the basis of per M.T. of the lignite of the desired quality produced. The mining service became taxable w.e.f. 01/6/07 by insertion of (ZZZy) to Section 65 (105) and therefore we have no doubt that w.e.f. 01/6/07 the appellant's activity was taxable under Section 65 (105) (ZZZy). In fact, the levy of service tax for the period from 01/6/07 is not disputed and the dispute is only for the period prior to 01/6/07. 7. According to the department, during period upto 15/6/05 the appellant's activity was taxable as cargo handling service under Section 65 (105) (Zr) and during period from 16/6/05 to 31/5/07 the same activity of the appellant was taxable as 'site formation and clearance and excavation of earth' under Section 65 (105) (ZZZa), as according to the Department during the....
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....appellant being engaged in loading of the mined lignite on to the trucks or railway wagons for transportation of the lignite to the destination, just loading of the mined lignite within the mining area into the trucks would not make this activity cargo handling service covered under Section 65 (105) (Zr). Moreover, the loading of mined lignite of the desired quality into the trucks referred to in Clause 4.2.1 (c) of the agreement is a very small peripheral activity for which there is no separate payment and in the entire agreement, the thrust is on mining activity and the payment is also on the basis of the quantity of the lignite of the desired quality produced. Therefore, from the nature of the contract also, it cannot be said to be a contract for handling cargo and, hence, it would be absurd to classify the appellant's activity during the period prior to 16/6/05 as cargo handling service and charge service tax on the entire remuneration being received by the appellant on that basis. Therefore, service tax demand for the period prior to 16/6/05 is not sustainable at all. In this regard, the judgment of the Tribunal in the case of Gajanand Agarwal vs. CCE, BBSR (supra) cited by th....