2023 (9) TMI 568 - CESTAT KOLKATA

Classification of services - site formation and clearance, excavation and earth moving and demolition service or not - Hiring of HEMM, Tippers, Drills, Dozers for removal of all types of over burden materials in all kinds of strata - levy of penalty - HELD THAT:- The service of “site formation and clearance, excavation and earth moving and demolition” was brought under the service tax net by the Finance Act, 2005 with effect from June 16, 2005 by inserting section 65(97a) and section 65(105)(zzza) in the Act. Subsection (97a)(i) of section 65 of the Act defines “site formation and clearance, excavation and earthmoving and demolition” to include drilling, boring and core extraction services for construction, geophysical, geological or similar purposes. The works undertaken by the Appellant as mentioned in Para 2 supra, clearly covered under the activities as defined in the above said definition of 'Site Formation' service - The works undertaken by the Appellant as per the work order mentioned in Para 2 supra, has been rightly classified as 'Site formation Service' as defined under Section 65(97a) of the Finance Act, 1994 and liable to service tax w.e.f.16.06.2005. Accordingly, the demand of service tax along with interest as confirmed in the impugned order is upheld.

Levy of penalty - HELD THAT:- It is now well settled that penalty cannot be imposed simultaneously under section 76 and section 78 of the Finance Act, 1996. Accordingly, the penalty imposed under Section 76 of the Finance Act, 1994 is set aside. Regarding the penalty imposed under Section 78 of the Finance Act, 1994, the Appellant stated that the issue is one of law. They were legally advised that the services rendered by them did not fall under the category “site formation and clearance, excavation and earthmoving and demolition service” and had proceeded on that basis. There was no intent or motive to evade payment of service tax - The issue involved is of interpretation in nature. No evidence has been brought on record to substantiate the allegation of intention to evade the tax. Considering the facts and circumstances of the instant case, the penalty under Section 78 cannot be imposed in this case.

The demand of service tax along with interest under 'Site Formation Service' as confirmed in the impugned order is upheld. The penalties imposed under Sections 76 and 78 are set aside - appeal allowed in part.