The New Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that concept of composite service not applicable when contract separately defined mining activity and transportation activity.
M/s. Rashleela Enterprises Pvt. Ltd. has filed the appeal to challenge the order dated 01.02.2017 passed by the Commissioner, Central Excise Commissionerate, Alwar. The Commissioner has held that the activities undertaken by the appellant in respect of the material/goods mentioned in the agreement would be leviable to service tax under “mining of minerals, oil or gas” service under section 65(105)(zzzy) of the Finance Act, 1994.
The appellant is engaged in the provision of services of mining, transportation of the mined goods from mining sites to other places and transportation of other goods to various principals/ mine owners. In this regard, the appellant entered into contracts with various principals for the provision of the requisite services by it.
The appellant contends that mining work was carried out independently by the principals as well as by the appellant or sometimes by both. Further, the goods mined by the principals have been transported by the appellant and vice-versa.
The appellant provided services as desired by the principals and charged for the same accordingly. With respect to the provision of mining services, the appellant acted as a contractor for carrying out the activities of overburden removal, mining the ore from the bottom of mine, cutting the rocks by drilling/blasting and raising of ore and the appellant charged for such services as per the rates given under the respective contracts.
The appellant also charged separate amount for the services rendered towards transportation of mined material to respective plants, crushers or other designated places and transportation of reject stones to dump sites at a place distant from the mines.
With effect from 01.06.2007 (i.e. after the introduction of service of „mining of minerals, oil or gas‟ under the ambit of service tax), the appellant obtained service tax registration and started paying the applicable service tax on the invoices raised for the services of mining provided by it.
A two member bench comprising Mr. Justice Dilip Gupta, President and Ms. Hemambika R Priya, Member (Technical) observed that” the services are separately defined in the contract and further separate bills have been raised for the mining activity and for the transportation activity. Further, we have already noted herein above that appellant have transported more mineral than what they have mined.”
The CESTAT held that the concept of composite service is not applicable and set aside the impugned order. The appeal is, accordingly, allowed.
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