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2023 (11) TMI 221
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.... equipments with operators, maintenance staff and supervisor staff for earth work and lignite excavation. The contract specifically mentions that required quantity of over burdened earth to be removed and simultaneous extraction of required quantity of lignite to be undertaken. It has further been elaborated in the contract that for the purpose of mining lignite, the appellant is required to deploy heavy earth moving machines like diesel operated hydraulic excavators of not less than 3 Cubic Meter bucket capacity and dumpers ranging between 25 to 35 MT and other allied equipments like bulldozers, pressurized water sprinklers, motor graders, water tankers etc. with adequate capacity to be deployed for carrying out the work. It is matter of record that lignite which is to be mined is generally found at a certain depth from the top level of the soil. For the purpose of extraction of lignite, the assessee is supposed to remove the over burden of sand, murrum, various clay levels, etc. The department entertained a view that appellant are engaged in site formation and clearance of the mining area and the amount received by them after 01.04.2005 should have been subjected to service tax f....
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....terial and then extracting of the minerals. It has been emphasized that over burden material is available in the mining area at various levels of mining of lignite. Thus it has been emphasized that removal of over burden and inter burden is undertaken throughout the mining process which is in relation to mining of lignite. Learned advocate has contended that it wrong on the part of the department to assume that merely the over burden is removed from surface area first and thereafter the excavation of lignite is undertaken by the appellant. Learned advocate has taken us to various clauses of the contract to show that entire activity is primarily pertains to mining/ excavation of lignite from the mines. 3. The appellant has further submitted that there is single tender floated by M/s. GIPCL for excavation of lignite and overburden removal which was assigned to the appellant by a single Letter of Intent (LOI) to carry out both the activities as a composite activity. Since no separate contract has been awarded for site preparation and excavation, the activity which has been undertaken by the appellant is primarily of excavation and mining of lignite. The clearance of overburden is i....
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....n the order-in-original therefore, same deserves to be dropped. 6. It has further been argued that it is a settled principle of law that if the dispute is out of interpretation of provisions of statute, no penalty can be levied even if it is held that service tax is payable. Learned advocate has heavily relied upon following decisions in this regard:- (a) Bharat Wagon & Engg. Co. Limited vs. Commissioner of C. Ex., Patna, (146) ELT 118 (Tri.- Kolkata). (b) Goenka Woollen Mills Limited vs. Commissioner of C. Ex., Shillong, 2001 (135) ELT 873 (Tri. Kolkata). (c) Bhilwara Spinners Limited vs. Commissioner of Central Excise, Jaipur, 2001 (129) ELT 458 (Tri. - Del.). 7. We have heard Shri Prabhat K. Rameshwaram, Addl. Commissioner, learned ADR who has reiterated the findings given in the order-in-original. 8. We have heard both the sides. Before proceeding further in the matter it will be proper to first have a look at the provisions of relevant contract entered between the appellant and M/s. GIPCL dated 07.11.2003. For the sake of convenience, we reproduce the schedule (iv) of the contract below:- On perusal of the above schedule, it can be seen t....
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....ation is observed as below, -Top soil -Sub soil -Limestone/Siderite -shale and clay -Lignite (with clay /shale intercalation) -Sand white. -Trap The constitution of over burden can be derived follows; 1. Top soil & Sub Sol - 15% 2. Limestone - 7% 3. Shale/Clay - 45% 4. Carbonaceous Clay/Shale - 35% 1. METHOD OF WORKING i) The equipment deployed by the contractor and methods and organization for handling the work shall be such as will ensure a regular and continuous production of lignite of required quality, which will ensure the completion of the works within the time herein specified. Further, the work should be executed strictly in conformity with the provisions of CMR 1957, Mines Act 1952 and all relevant rules, bye laws and statutory provisions and instruction given by the GMDC and/or Mines Manager from time to time. V) if any economic mineral other than lignite is found in overburden / interburden, the contractor shall excavat....
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....Excavation and Earth Moving and Demolition but at the same time, all these activities undertaken by the appellant is for the purpose of mining only. In this position, we find that if at all, there is a doubt about the particular service to be classified under one or more category the principle laid down for classification of taxable service under Section 65A need to be applied. The same is reproduced below:- Classification of taxable services "SECTION 65A.. For the purposes of this Chapter, classification of taxable services shall be determined according to the terms of the sub-clauses of clause (105) of section 65; (2) When for any reason, a taxable service is, prima facie, classifiable under two or more sub-clauses of clause (105) of section 65, classification shall be effected as follows: (a) the sub-clause which provides the most specific description shall be preferred to sub-clauses providing a more general description; (b) composite services consisting of a combination of different services which cannot be classified in the manner specified in clause (a), shall be classified as if they consisted of a service which gives them thei....
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....ar purposes; or (ii) Soil stabilization; or (iii) Horizontal drilling for the passage of cables or drain pipes; or (iv) Land reclamation work; or (v) Contaminated top soil stripping work; or (vi) Demolition and wrecking of building, structure or road, But does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies". "Section 65 (105)(zzza) - to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities". "Section 65 (105)(zzzy) - to any person, by any other person in relation to mining of mineral, oil or gas;" We note that activity undertaken by the appellants is excavation and removal of O/B waste and mining of ore. We also note that there is only one contract with the appellants showing the scope of work as excavation and removal of O/B waste and mining of ore. This activity starts from excavation and ends at mining of ore. We find that this is a composite activity a....
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....refore, the impugned order is not sustainable hence the same is set aside. Appeal is allowed with consequential relief. 10. In view of our above discussion and following the above cited decision of this Tribunal, we hold that order-in-original is without any merit and therefore, we set-aside the same. 11. Accordingly, the appeal is allowed. (Pronounced in the open court on 03.11.2023) ============= Document 1 GUJARAT INDUSTRIES POWER COMPANY LIMITED Schedule-IV Description (1) (2) Rate/Unit Amount (Rs) PRICE SCHEDULE: Depth (3) Quantity (4) (5) (6) mtrs. Cu. Mtr Cu Mtr Rs 0 to 60 200,00,000 33.48 6696,00,000 33.21 Nil Supply of equipment with operators and maintenance staff for (1) Excavation and removal of overburden /earth excavation/ shale etc.. in all sorts of soil at all depths and disposing the excavated material within the mines premises as directed by GIPCL with all lead and lift, including leveling dumps at certain intervals and consolidating the same as per prevailing mines rules and as directed and to the entire satisfaction of the GIPCL. (Rato is inclusive of pumpi....