TaxTMI 
TaxTMI 
2025 (4) TMI 770
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....ection 65(19) w.e.f. 16.06.2005. Accordingly, show-cause notice was issued and the Commissioner in the impugned order observing that the above service was nothing but processing of ore essential for marketing the extracted ore, classified the same under Business Auxiliary Service and confirmed the demands invoking suppression and also imposed penalty under Section 77 and 78 of the Finance Act, 1994. Aggrieved by this order, the appellant is in appeal before us. 3. The Learned Counsel for the appellant submitted that admittedly they are rendering screening and grading of iron ore service. The appellant is into mining operations and the above service is one of the mining services. He submits that with effect from 01.06.2007 vide Section 65(105)(zzzy), 'mining services' was introduced where mining services was defined as 'any service provided or to be provided to any person, by any other person in relation to mining of mineral, oil or gas'. It is further submitted that the word 'mining' since not defined in the Finance Act, 1994, the same needs to be derived from the Mines Act, 1952 and the Mines and Minerals (Development & Regulation) Act, 1957 (MMDRA). As per the definition of mi....
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....d to file the ST-3 returns or disclose their activity, there was clear suppression of facts and hence, the Commissioner has rightly confirmed the service tax amount invoking suppression. Relies on the decisions rendered in the case of Commissioner of Central Excise, Vishakapatnam vs. Dr. Mukundakam Sharma (S.C.) and Commissioner of Central Excise Surat-I Vs. Neminath Fabrics Pvt. Ltd. 5. Heard both sides. The fact that the appellant is engaged in providing services of screening, grading of iron ore is not disputed, the only dispute is whether these services fall under 'Business Auxiliary Service' as alleged by the Revenue or under 'Mining Services' as claimed by the appellant. The claim of the Revenue is to classify them under para '(v) Production or processing of goods for, or behalf of, the client' which is part of the definition of 'Business Auxiliary Service' as per the Section 65(19) of the Finance Act, 1994. 'Mining services' as per Section 65(105)(zzzy) was defined as 'taxable services means service provided or to be provided to any person, by any other person in relation to mining of mineral, oil or gas'. 6. The Board vide letter dated 28.02.2007 reproduced below refe....
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.... * outsourced services, provided for mining are individually classified under the appropriate taxable service. Services provided in relation to mining of mineral, oil and gas are comprehensively covered under this proposed service. With this, services provided in relation to both exploration and exploitation of mineral, oil or gas will be comprehensively brought under the service tax net. 6.2.1 The trend is to outsource part or whole of the mining activities. Since exploration and mining of mineral, oil or gas are comprehensively brought under the service tax, field formations may undertake necessary action. The following activities of the appellant are proposed to pay taxes under Business Auxiliary Service: (a) To liaison with SCCL and receive/take delivery of raw coal i.e. as per the schedule. (b) To undertake all incidental/auxiliary services such as permits, clearances, liaison with Railway authorities organize railway siding at the loading points. (c) To ensure that the wagons are not overloaded and supervise the transportation by keeping themselves apprised and be thoroughly conversant with the Rules and regulations....
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....-6-2007. As washing of coal is recognized as a part of mining activity in the enactment relating to mining, in our view the washing or beneficiation of coal would be liable to service tax only w.e.f. 1-6-2007. In the case under appeal the period is prior to 1-6- 2007 and therefore our conclusion is that for the relevant period the activity carried out by the appellant would not be liable to service tax as mining service. 16. Once it is established that the activity of the appellant is mining,, it cannot be taxed under the Business Auxiliary Service for the period prior to 1-6-2007. Even when we examine the definition of business auxiliary service, it is seen that production which does not amount to manufacture comes under business auxiliary service. The beneficiation of coal does not amount to production of coal because beneficiation is a process, which enhances the quality of the coal. However, in the definition of business auxiliary service, an amendment was carried out to include process also w.e.f. 16-6-2005. The appellant has made an alternative submission that if the activity carried out by them is not considered as mining activity the demand can be sustained only fr....
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....ne, and in, adjacent to or situated on the surface of, the mine where the washing of coal obtained from the mine or manufacture, therefrom, of coke is carried on. Similar definition is appearing in Section 2(g)(x) of the Coal Mines (Taking Over of Management) Act, 1973. The Coking Coal Mines (Emergency Provisions) Act, 1971 has also defined 'mine' in similar manner. In all the enactments relating to coal mining, washing of coal has been treated as part of the mining activity. As laymen we tend to think that mining means only digging deep into the earth and extracting the minerals. However, in the statutory provisions the definition of mining appears to be very wide. In the Colliery Control Order Section 2(c) defines 'Colliery'. 'Colliery' means any mine or open working where winning or extraction of coal is the principal object of the mining, quarrying or any other operation carried on therein, and includes a plant for the production of coke or for the washing of coal. When the ash content of the coal is very high, the quality is poor. The Mines and Minerals (Development and Regulation) Act, 1957 in the Second Schedule gives the different gradations of coal. Among the gradation, wa....
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....d appliances. According to the members of the 1st petitioner, they supply offshore support vessels to carry out jobs like anchor handling, towing of vessels, supply to rig or platform, diving support, fire fighting etc. Their marine construction barges support offshore construction, provide accommodation, crane support and stoppage area on main deck or equipment. Their harbour tugs are deployed for piloting big vessels in and out of the harbour and for husbanding main fleet. They give vessels on time charter basis to oil and gas producers to carry out offshore exploration and production activities. The right of possession in and effective control of such machinery, equipment and appliances is not parted with. Therefore, those activities clearly fall in entry (zzzzj) and the services rendered by the members of the 1st petitioner have been specifically brought to the levy of Service Tax only upon the insertion of this new entry. 38. If the Department's contention is accepted that would mean that the activities of the members of the 1st petitioner are covered by entry (zzzy) and entry (zzzzj). Such a result is difficult to comprehend because entry (zzzzj) is not a specie of w....
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....aid that the same activity will be liable to tax under pre-existing as well as new entry. Following the said ratio, which has been adopted in many other cases by the Tribunal, we hold that there is no merit in the contention of the Revenue for the tax liability of the appellant in respect of supply of tangible goods prior to 16-5-2008. (emphasis supplied) 21. In the instant case, the definition of BAS did not undergo any change when a new service 'in relation to mining' was introduced with effect from 1 June, 2007. The Department admits that with effect from 1 June, 2007, the activity carried out by the appellant is covered under the category of service in relation to mining. This activity could not, therefore, have been categorized under BAS prior to 1 June, 2007. 22. Thus, the demand of Service Tax in the impugned order under BAS from 16 June, 2005 to 30 May, 2007 is not justified. 23. What is, however, disturbing is the manner in which the three binding decisions of the Tribunal, on which reliance was placed by the appellant, were not followed by the Principal Commissioner. After noticing the decision of the Tribunal in Aryan Energy and the fa....