TaxTMI 
TaxTMI 
TaxTMI 
2024 (4) TMI 11
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....iary Services' as defined under Section 65(19) of Finance Act, 1994 being Production or processing of the goods for, or on behalf of client taxable with effect from 16.6.2005, Show-cause notice was issued on 22.6.2006 proposing to recover Service Tax amount of Rs.1,55,17,723/- for the period 16.5.2005 to 31.03.2006 with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 2.1 At the outset, the learned advocate for the appellant has submitted that the appellant under the raising agreement with M/s. Mysore Minerals Ltd., mining lease holder in respect of mines in Jambunathanahalli village provided service for mining of iron ore from the said mine. Referring to various clauses of the said 'Raising Agreement' dated 03.05.2003 including clause (21), the learned advocate has submitted that for the activities viz. to explore, develop, excavate, to extract, grade, screen, size, sort and stacking iron ores narrated in the said Agreement, the appellant had charged and received Rs.188/- per metric tonne to every ton of calibrated iron ore and Rs.25/- per metric tonne for iron ore fines raised and generated by them. It is his c....
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....r submits that in the present case, the activities carried out by the appellant are specifically covered under the category of taxable service of "mining of mineral, oil or gas" falling under Section 65(105)(zzzy) of the Finance Act, 1994, hence, taxable only with effect from 01.06.2007 and not for the earlier period under any other taxable category. In support, he has referred to the judgment of the Hon'ble Bombay High Court in the case of Indian National Shipowner's Association vs. UOI: 2009 (14) STR 289 (Bom.) upheld by the Supreme Court reported in UOI vs. Indian National Shipowner's Association: 2011 (21) STR 3 (SC). 2.5 Further, referring to the Circular No.334/1/2007-TRU dated 28.2.2007 issued by the Board, clarifying the scope of 'mining of mineral, oil or gas' services after the introduction of the said levy in 2007 Union Budget and further clarification vide Circular No.232/2/2006-CX.4 dated 12.11.2007, he has submitted that the instructions issued under the said circular are clear, unambiguous and binding on the authorities. It is clarified that the activities of exploration, extraction of minerals and lifting them up to the pit head are classified under "mining of mine....
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.... for use" under the Section 65(105)(zzzzj) of the Finance Act, 1994. The issue before the Hon'ble High Court was whether the activity of assessee is covered under 'mining of minerals services' before 16.5.2008 when the taxable category of service of "supply of tangible goods" had been introduced. The Hon'ble High Court held that the services rendered by the appellant would fall under the category of "supply of tangible goods for use" and not under the category of "mining of mineral service" since the activity had no direct nexus with the mining. In this context, an observation was made that Entry 65(105)(zzzzj) was inserted without amending the entry 65(105)(zzzy) and the latter entry is not a subspecies of the former. The Hon'ble Apex Court upheld the judgment of the Bombay High Court, however, not affirmed the view that if a service is added later into the taxable service list, it automatically means that the activity was not covered by the earlier taxable category. Therefore, if it can be established that the activity carried out by the appellant is covered under 'Business Auxiliary Service', it should be taxable up to 01.06.2007 under the said category. 3.1 Referring to the ju....
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....Kol.) - In para 8, the Hon'ble Tribunal has said that the grounds of appeal by Revenue are beyond show-cause notice and also that the contract cannot be divided into separate activities. The decision is based on these grounds. Also, the judgment is not clear as to under which limb of Business Auxiliary Service, the Revenue was trying to classify the service. Also, there is no reason as to why it is mining service and no Business Auxiliary for the period concerned. (iii) Hazaribagh Mining and Engineering Pvt. Ltd. vs. CCE & ST, BBSR II: 2017 (49) STR 289 (Tri.-Kol.) - The competing service is site formation service. (iv) CCE, C & ST, BBSR II vs. B K Thakkar: 2008 (9) STR 542 (Tri.-Kol.) - Competing service is cargo handling service whereas the contract was a composite contract. (v) CCE, Hyderabad vs. Vijay Leasing Company: 2011 (22) STR 553 (Tri.-Bang.) - Competing service is site formation service. (vi) Balaj Mines and Minerals Pvt. Ltd. and Ors. Vs. CCE, Belgaum: 2020-TIOL-158-CESTAT-Bangalore - competing service is site formation service. (vii) M. Ramakrishna Reddy vs. Commr. of C. Ex. & Cus. Tirupathi: 2009 (13) STR 661 (Tri.-Bang.) - Competing service is site formatio....
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....rations" used in this Agreement shall mean explore, develop, excavate, extract, grade, screen, size, sort and stack etc of iron ore/minerals from the mine. Clause 3 The Second party shall during the continuance of this agreement scientifically and systematically carry-on mining operations to extract, excavate, raise, grade, screen, size, sort and stack etc., on the schedule area and thereafter the entire schedule area of the First Party. Clause 4 : The extraction of minerals from sand mine shall be carried out by the Second Party by itself or through other agency in accordance with the established mining practice, in conformity with the mining laws, rules and regulations for the time being in force. Clause 5 : Upon execution of this agreement the First Party shall hand over possession of the said mines to the Second Party, shall be entitled to enter upon the schedule land and to carry out all necessary operations for implementing the terms contained herein and putting up crushing and screening plant of required capacity and temporary constructions and maintaining structures such as huts, buildings, workshops, store house and any other such structure which may be necessary for....
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....erty as may be necessary for carrying out the mining operations in a systematic manner and in conformity with statutory requirements, and; (e) Remove the debris that is required to be removed for the purpose of mining operations; (f) Carry out such works as may be required to enable it to carry out mining operations discharging its other obligations under this Agreement fulfilling all the statutory requirements under the relevant mining laws; (g) Be entitled to put up temporary structures like crushing and screening plant, electrical poles and overhead/underground cables, office, huts, sheds, store house or any other structures that may be necessary for carrying out mining operations and shall comply with all such requirements of law that govern erection of such structures As per the Mines and Regulations. Clause 21: The First Party hereby agrees to pay to the Second Party a sum of Rs. 188/- per metric ton to every ton of calibrated Iron Ore, Rs 25/- per MT of Iron Ore fines raised and generated as given in SCHEDULE "D". It is agreed by and between the Parties that the Second Party shall raise/produce Calibrated Iron ore, BHO of 10-30 mm sizes and iron ore fines so gene....
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....ded or to be provided to any person, by any other person, in relation to mining of minerals, oil or gas". 10. A comparison of both the entries in the context of the present Agreement, we find that mining service is more appropriate entry in comparison to Business Auxiliary Service which broadly covers activities of production or processing on behalf of the client, therefore, applying principles of classification mentioned under Section 65A of the Finance Act, 1994, the more specific description be preferred to the General description. Besides, we find that after introduction of the levy on mining operation, Circular No.334/1/2007-TRU has been issued by the Board on 28.02.2007 explaining the "Mining of Mineral, Oil or Gas' service at para 6.2 of the said Circular which reads as follows: "6.2 Mining Service [section 65(105)(zzzy)] : Presently, geological, geophysical or other prospecting, surface or sub-surface surveying or map-making services relating to location or exploration of deposits of mineral, oil or gas are leviable to service tax under "survey and exploration of mineral service" [section 65(105)(zzv)]. Services such as - * site formation and clearance, and excavation ....
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....dered earlier in the case of M/s. G. S. Atwal & Co. Engineers Pvt. Ltd. vs. CST, Kolkata vide Final Order No.75533/2023 considering and comparing the three competing services viz. Cargo Handling service, Business Auxiliary Service and Site Formation and clearance, excavation and demolition services with that of 'mining services' held that the activities carried out by the appellants, which are akin to the services rendered by the Appellant in the present case, fall under the scope of mining operations, hence, leviable to tax w.e.f. From 01.06.2007. 14. The reliance placed by the Ld. A.R. for the revenue on the judgement of the honourable Bombay High Court in CIT Vs Sesa Goa(I) Ltd.'s case in support of his contention that extraction of Iron Ore is not a simple processing activity but results into production of iron ore, hence covered under the scope of BAS, will not be of much help. In the said case the Hon'ble High Court was confronted with the issue under the income tax act where the question was whether the assessee is entitled for deduction on account of investment allowance when the assessee is engaged only in processing activity not in production and manufacture of any artic....