TaxTMI 
TaxTMI 
2025 (6) TMI 1811
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.... Reddy, Managing Director of VMICPL has also come in appeal vide Appeal No. ST/30324/2019 against the impugned order to the extent of imposition of penalty. The Revenue has also come in appeal vide Appeal No. ST/30342/2019 against the said impugned order to the extent of demand dropped by the Adjudicating Authority. Since all these three proceedings are emanating from the same SCN and impugned order, these appeals are being taken up together for the purpose of disposal. 2. The brief facts of the case are that the department issued SCN dt.05.07.2018 to VMICPL for the period from January, 2013 to March, 2017, based on certain intelligence that they were engaged in rendering taxable services but were not properly discharging their service tax liability. Based on further investigation and scrutiny of documents including statements recorded in respect of Mr. Vijay Sekhar Reddy, the department, inter alia, felt that they have not discharged service tax on services rendered by them during the period January, 2013 to March, 2016 when they had undertaken the work of excavation and removal of overburden and barytes ore including drilling 110 dia holes, controlled blasting, loading, transp....
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....ndustries Pvt Ltd Vs CCE & ST, Bhubhaneswar [2018 (10) GSTL 547 (Tri- Kolkata)] to come to the conclusion that the activity of mining is service activity, which is subjected to service tax and not manufacturing activity as contended by VMICPL. Similarly, he has upheld the demand of service tax on transportation of goods by not accepting the defence of revenue neutrality even when the service tax was payable under Reverse Charge Mechanism. As regards irregular availment of credit on MS Angles, Sheets & Squares, as capital goods and availing credit of Rs.30,33,188/- on inputs and input services without having invoices, he considered the argument of VMICPL that the said goods were used for repairing tippers and dumpers and held that since dumpers and tippers are included in the category of capital goods, these goods would be eligible for Cenvat credit, having placed reliance on the judgment of Hon'ble Supreme Court in the case of CCE Vs M/s Rajasthan Spinning and Weaving Mills Ltd [2010 (255) ELT 481 (SC)] and on the decision of this Tribunal in the case of M/s Matrix Laboratories Ltd Vs CCE, Hyderabad [2016 (339) ELT 122 (Tri-Hyd)]. For credit of inputs and input services he, after g....
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.... being carried out by the appellant are nothing but production of ore. Therefore, from the combined reading of definition of 'production' and section 66D(f), their activities would be covered under the negative list and therefore, not liable to service tax. 7. We find that VMICPL is sub-contractor of the principal contractor VLCSCKCJV, who has entered into contract with APMDC. This agreement was for the excavation and removal of overburden and barytes ore (ROM). Therefore, it is obvious that this is a comprehensive contract for excavation of Rune-Of-Mine (ROM) barytes ore and some of the terms and conditions of the agreement also indicate that the ore produced from the mines shall not be dumped on the ramps/road leading from the miner order face to the stock yard and that they shall produce certain quantity of barytes ore and a certain quantity of overburden per annum. Therefore, what is obvious is that they are required to undertake total work right from the beginning of excavation and removal of overburden to the extraction of barytes ore and its further sizing, screening and transportation. It is also obvious that what was covered under the mining services prior to negative l....
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....ed this concept and instead relied on the grounds that since they were engaged in the activity which was aptly covered under mining services prior to 01.07.2012, they would still continue to be covered under the same service, even when there is no chargeability of service tax, based on specified service beyond 01.07.2012. Therefore, the submission of VMICPL that since they are engaged in production of baryte ore, which is not disputed even in the SCN and which is also apparent from the composite contract awarded for baryte production as well as extraction and removal of overburden, is correct. The appellants have also relied on the judgment in the case of Avian Overseas Pvt Ltd Vs CCE, BBSR-II [2009 (15) STR 540 (Tri-Kol)], wherein the Coordinate Bench has, inter alia, held that coal is excisable product and the activity of mining coal and producing coal would come under the definition of 'manufacture' under section 2(f) of the Central Excise Act, 1944. VMICPL was given the sub-contract for production of baryte ore from the baryte mines of APMDC and such production would always entail removal of overburden first before the baryte ores in ROM condition can be extracted and thereafte....
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....ed by the service provider for incorporation in the construction, which belong to the provider and for which the service recipient is charged towards the value of such supply/provision/use and the corresponding value hereof was received by the service provider, to accrue to his benefit, whether independently specified as attributable to the specific material/goods incorporated or otherwise, would alone constitute the gross amount charged. This is not to say that an exemption Notification cannot enjoin a condition that the value of free supplies must also go into the gross amount charged for valuation of the taxable service. If such intention is to be effectuated the phraseology must be specific and denuded of ambiguity. 16. In conclusion, we answer the reference as follows: (a) The value of goods and materials supplied free of cost by a service recipient to the provider of the taxable construction service, being neither monetary or non-monetary consideration paid by or flowing from the service recipient, accruing to the benefit of service provider, would be outside the taxable value or the gross amount charged, within the meaning of the later expression in section....
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....the same attracts section 73A and this was based on the proposition that they had collected service tax. However, the fact remains that demand in this regard is raised under section 73 and not under section 73A and it is a settled law that adjudication order cannot traverse beyond the SCN. 14. We find that the ground for charging service tax on the value of free supply of diesel was that it was treated as non-monetary consideration. There is force in the argument that demand has been made under section 73 and not under section 73A and that they have not collected any service tax, per se, on the said amount. Therefore, section 73A could not have been invoked suo moto by the adjudicating authority. Department is of the view that in terms of section 67 of Finance Act, 1994, specially section 67(1)(ii), where provision of service is for a consideration not wholly or partly consisting of money, equivalent money value of non-monetary consideration is to be added. However, we find that except that they noticed from balance sheet an entry of Rs.21,49,19,752/-, direct income against the diesel supplied free of cost and noticed that they have raised invoices for collection of service tax ....
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.... that the SCN has alleged the grounds for suppression at Para 10 and 10.1 to come to the conclusion that VMICPL has wilfully suppressed the facts and contravened various provisions of the Act and Rules and therefore, extended period is invokable. We find that the grounds taken are primarily that in the regime of self-assessment, the department comes to know about the facts of service rendered and payment made only during the scrutiny of the statutory returns and therefore, it places greater onus on the assessee to confirm to higher standards of disclosure of information in their statutory returns. It also stated that they have not paid the service tax and that they had suppressed value of services rendered in the taxable column of ST3 returns pertaining to the period January, 2015 to March, 2015 by deliberately claiming non-taxability of service with sole objective of averting service tax liability. They have also relied on Rule 9(6) of Service Tax Rules, which requires the appellant to maintain records for receipt and consumption of input services in which relevant information regarding the value, tax paid, Cenvat credit taken and utilized, the person from whom the input service h....
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....facts of the case, find that the adjudicating authority has rightly held that department was well aware of their activities and especially in the absence of any other cogent and strong evidence by the department, there is no ground to invoke extended period. Therefore, to that extent, we dismiss the grounds taken by the Revenue and uphold the views of the adjudicating authority. 19. We find that this issue needs to be decided in terms of section 67 which deals with valuation of taxable services for charging service tax. A plain reading of the expression 'gross amount charged' would mean any amount charged by the service provider for the service provided or to be provided in relation to the said goods. In this case, there is no evidence on record to indicate that they have provided any service in relation to the said supply of diesel FOC outside the scope of contract and merely because they have accounted for this as income for the purpose of certain taxation under different law, it could not be considered as income attributable to any service provided by them to SCCL where the free supply could be considered as consideration. We find that in view of judgments in the case of Bhay....
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....e. (C) Irregular Availment of Cenvat Credit:- 21. The adjudicating authority has dropped the demand raised on the appellant for availing Cenvat credit on MS angles, sheets, squares etc., used for repairs of tippers and dumpers, both on merit and on the grounds of limitation. The department has contested that the adjudicating authority has not appreciated the factual matrix inasmuch as the said goods were actually used for repairs of tippers and dumpers as these goods are essentially used in construction/erection activities. 22. Department has also relied on various judgments where such credits have been denied. We find that in the SCN, the only ground taken for denial of said credit in respect of certain inputs was that said inputs were falling under Chapter 72 and therefore, cannot be treated as capital goods. Whereas, the adjudicating authority has considered various submissions and was satisfied that the said goods can be considered as components, spares, etc., of the capital goods and since dumpers and tippers were capital goods, the goods were eligible for the said credit. We also find that there were only limited grounds taken in the SCN for denying the credit and no....
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....as already satisfied and has allowed only to the extent he was satisfied with the documents. We find that VMICPL has not been able to adduce any further tangible evidence that they were having sufficient documents to prove that they had taken credit only on the strength of eligible documents. Therefore, we do not find any merit in the objection of VMICPL as regards denial of credit, where the documents were not produced before the adjudicating authority. To that extent their appeal is not sustained on merit and appeal of Revenue is upheld. (E) Service Tax on transportation activity under RCM: 25. In this case, the adjudicating authority has upheld the leviability of service tax to the extent it was relevant for the demand period and therefore, he has confirmed the demand of Rs.3,03,081/-. He has also dropped demand of Rs.4,32,521/- as time bar. We do not find that the grounds taken by the department are sustainable on the ground that extended period is rightly invokable. Since we have already discussed the issue of limitation based on prior knowledge of department, we hold that extended period cannot be invoked and we do not find any fault in the reasoning given by the adjudi....