Activity of Excavation & Removal of Soil falls under 'Mining Services': CESTAT [Read Order]

The CESTAT, Ahmedabad bench has held that the activity of excavation and removal of soil would be treated as “Mining Services” for the purpose of the Finance Act and therefore, service tax cannot be levied for the period 16-6-2005 to 31-5-2007.

Earlier, the department demanded tax from the appellant, Associated Soap Stone Distributing Company Pvt Ltd, for the period 16-6-2005 to 31-5-2007 along with interest observing that the said activity would fall under the category of “Site Formation and Clearance, Excavation and Earth Moving and Demolition Services.”

Mr. Ramesh Nair (JM) and Mr. P Anjani Kumar (TM) was of the view that if taxable service is prima facie classified under two or more sub-clauses of clauses under Section 65, classification shall be effected on the basis of sub-clauses which provides the most specific description as compared to sub-clauses providing more general description.

“In the facts of the present case, it is undoubtedly clear that between appellant and the service recipient M/s. GMDC even though the nature of activity independently is of excavation and removal of soil but the objective of this activity is for mining only. In case of any mining activity, the activity of removal of over burden is inevitable. If the contention of the revenue is accepted then in case of all mining activities, the activity of excavation, removal of soil will go out of mining service which is not the intention of the legislature. Therefore, considering the above provision for classification of taxable service particularly in terms of Sub-section (1)(2a) of Section 65A as per the nature of the service in the present case, the removal of over burden which is exclusively meant for mining of lignite shall fall under the category of mining service only,” the Tribunal said.

While quashing the demand, the Tribunal observed that “From the above judgment, it can be seen that in the appellant‟s own case similar activities were considered as “Mining Service” therefore, the ratio of the above judgment directly applies in the facts of the present case also. It is also pertinent to note that the appellant, on the same service, paid service tax under the category of “Mining Service” with effect from 1.6.2007 and it is admitted fact that the revenue had accepted the classification of the same service under “Mining Service”. It also strengthens the case of the appellant that the service provided by them is of “Mining Service” and does not fall under the category of “Site Formation and Clearance, Excavation and Earth Moving and Demolition Services.”

To Read the full text of the Order CLICK HERE

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