2023 (9) TMI 524 - CESTAT CHENNAI

Classification of services - Mining Services or Business Auxiliary Service? - service of segregation of magnesite - HELD THAT:- The impugned order had found that the activity is equally classifiable under both the services and as per section 65A of the Finance act 1994, the activity under the sub-clauses which occurs first among the sub-clauses is preferable. The learned Commissioner (Appeals) has hence chosen to accept the classification of the service as ‘Business Auxiliary Service’ as in the Order in Original and rejected the appeal.

The activity of collection, cleaning, segregation and stacking of blasted raw magnesite is provided in relation to mining. The activities undertaken by the appellant are a part of the mining operations and are more appropriately classified as a ‘Mining Service’. Mining activity has been made taxable by legislation with effect from 1.6.2007 only. Prior to this date, such activities, being part of mining operations, were not subjected to service tax. The period of demand in this case is from 6.10.2006 to 11.6.2007, therefore, no service tax is leviable on such activities for a major part of the impugned period.

Thus, the activity of collection, cleaning, segregation and stacking of blasted raw magnesite is classifiable under the category ‘Mining Services’ classifiable under section 65(105)(zzzy) of the Finance Act, 1994 and the demand is restricted to the period from 01/06/2007 onwards.

Thus, duty and interest may be worked out accordingly - Since duty was payable only from 01/06/2007 late fee and penalties are set aside - appeal disposed off.