TaxTMI 
TaxTMI 
2026 (1) TMI 1076
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....nstruction of flood protection wall, fencing, providing inlet arrangement, providing access ramp for maintenance, widening waterways or bridges, etc., from Adyar South Lock to Okkiyam Maduvu, (from 0m to 10,500m - reach I & II) package V. The Department was of the opinion that the type of work carried out by the Appellant in the South Buckingham Canal, a backwater, is taxable under the category of "dredging service", and therefore the Appellant is liable to pay service tax on the amounts received towards this work. The Department issued a show cause notice dated 4-4-2013, demanding service tax for the Dredging Service rendered by the appellant, along with applicable interest and proposing imposition of penalties. 3. After due process of law, the Adjudicator confirmed the demand along with applicable interest and imposed penalties under section 76 and 77 of the Finance Act, 1994. Aggrieved by the same, the Appellant preferred an appeal before the Commissioner of Central Excise (Appeals), Salem. The Appellate Authority however, rejected the Appellant's contention and finding that the definition of dredging as provided in section 65 (36a) of the Finance Act is an inclusive defi....
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.... 2. Package I (Kodungaiyur) - Rs.3,44,49,740 3. Package III (Buckingham canal) - Rs. 8,26,33,444/- 4. Package II (Maduravoyal) - Rs. 85,17,042/- 5. South Buckingham Canal- Rs.21,53,012/- Period : 2010 - 2013 Total Demand : Rs.15,30,17,661/- Impugned Order: 08/2013 dt. 07.10.2013, 05/2014 dt. 28.03.2014, 04/2015 dt. 30.04.2015, 5/2014 dt. 28.03.2014 Appeals : ST/40066/2014, ST/41559/2014, ST/41748/2015 'Dredging service', defined in Section 65 (36a) of the Finance Act, 1994 reads as under: (36a) "dredging" includes removal of material including, silt, sediments, rocks, sand, refuse, debris, plant or animal matter in any excavating, cleaning, deepening, widening or lengthening, either permanently or temporarily, of any river, port, harbour, backwater or estuary; 9.2 Thus, as per the definition in the Finance Act, 1994, the following key ingredients must be present for the activity to fall in the fold of 'dredging service' :- An activity like removal of material like silt, sediments, rocks, sand, refuse, debris, plant or animal matter; Such removal activity is done in any ex....
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....e, akin to drag A 'Dredger' is defined as: A dredger is a boat which is fitted with a special machine that is used to increase the size of harbours, rivers, and canals. 9.4.3 As per the Oxford Online Dictionary 'Dredge (Verb)' means, to : 1 Clear the bed of (a harbour, river, or other area of water) by scooping out mud, weeds, and rubbish with a dredge. 'the lower stretch of the river had been dredged' 'the dredging and deepening of the canal' 1.1 Bring up or clear (something) from a river, harbour, or other area of water with a dredge. 'mud was dredged out of the harbour' The word 'Dredge (Noun)' is described as : An apparatus for bringing up objects or mud from a river or seabed by scooping or dragging The origin of the word is explained as : Late 15th century (as a noun; originally in dredge-boat): perhaps related to Middle Dutch dregghe 'grappling hook' The word Dredged (Noun) is defined as : A boat designed for dredging harbours or other bodies of water. 9.4.4. As per the Macmillan Online Dictionary 'Dredge (Verb)' means, to : 1. to remove dirt....
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....l related to or while excavating, cleaning etc., required to be present in tandem, but also, such activity will require the use of a boat, ship etc. equipped with a dredger, or, at the very least, there has to be use of dredging apparatus for enabling the activity. 9.7 We now intend to test our increased understanding of the nature and scope of dredging to adjudge whether the activity performed by the assessee will fall within the scope of "dredging" for the purpose of the Finance Act, 1994. 9.8 The projects undertaken by the assessees which have been alleged to be conduct of dredging activities are (1) Southern Basin Package VII (Velacherry), (2) Package I (Kodungaiyur), (3) Package III (Buckingham canal), (4) Package II (Maduravoyyal) & (5) South Buckingham Canal. 9.9 We find, that all these projects involve Buckingham canal or various drainage channels flowing from Velacherry towards that canal. We find that in respect of Southern Basin Package, assessees have only undertaken widening, deepening and construction of flood protection wall using cement and steel. In respect of Package I (Kodun....