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2018 (7) TMI 98 - AT - Service TaxClassification of services - appellant were providing services to M/s Rajasthan State Mines and Minerals Ltd. which is the activity of depressurising an aquifer in Mata Sukh Liginte Mines - whether the service classifiable as site preparation and clearance service or mining activity? Held that:- It is apparent that appellant was already awarded work of mining activity i.e. of mining lignite from the mines vide an agreement of 27.01.2003. It is during this activity that the appellant noticed a big water aquifer. Though water aquifers are often found in the mines and need simultaneous cleaning while mining but as per appellant, which is not been denied or disputed by the Department, the impugned water aquifer was much bigger water body found within the mine having much large volume of water requiring much more amount of investment to depressurise the same - the sole intention of the subsequent agreement is not the site clearance as per the strict meanings in Section 65(97a) but is the part of the mining activity itself and that the same was entered into with the sole objective of justifying the financial burden upon the appellant. The activity carried out by the appellant was the mining activity which has been identified as taxable activity only beyond 01.06.2007. Hence, the demand for the period prior the said date is absolutely not sustainable - Reliance is also placed on the Circular No. 232/2/2006–E 1-4 dated 12.11.2007 which says that activities as that of excavation, drilling, removal of overburdens, etc. are the essential integral processes and are the part of mining operations and since the mining activity is taxable w.e.f. 01.06.2007, prior to this date such activities being part of mining operations itself are not subject to service tax and as such no service tax is leviable on such activities prior to the said date. The activities for the period beyond 01.06.2007 till 31.03.2008 - Held that:- It is observed that though the activities of appellant are no doubt the mining activities but it is observed from the impugned Show Cause Notice that the same has not been so alleged - In Show Cause Notice, the Department has alleged the said activity as that of site clearance. In such circumstances, the principle is well settled that the classification of taxable service which is not alleged in the Show Cause Notice cannot be concluded to support levy of tax. Penalties - Held that:- There is no positive act is alleged by the Department which may amount to committing suppression of facts or which may reflect any malafide on part of the appellant with an intention of evading tax. The question of imposition of penalty does not at all arise - penalty not warranted. Appeal allowed - decided in favor of appellant.
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