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2016 (8) TMI 675 - CESTAT NEW DELHI

2016 (8) TMI 675 - CESTAT NEW DELHI - TMI - Nature of composite works contract - drilling, cross cutting, conventional raising, ramp excavation, long hole blasting, withdrawal of blasted ore etc. w.r.t. underground mines - mining service - It was contended that, after the introduction of mining as taxable service w.e.f. 01/6/2007, the appellants have discharged service tax on these services. It is not legally sustainable to tax the same activity under different category for different periods unl .....

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hen the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/2007 the same activity cannot be classified under site formation service. - Value of free supply items cannot be held to be charge for services provided by the appellant. Hence following the ratio of decided cases we find the impugned order cannot be sustained on this ground also. - Regarding the service tax payable by the appellant under the category of mining services w .....

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ggrieved by the order dated 30/1/2009 of Commissioner of Central Excise, Jaipur - II the appellants preferred this appeal. They are engaged in Mine Development, Exploitation and Mining of Ores for Hindustan Zinc Limited in various underground mines. The Department entertaining a view that the appellants are liable to service tax in respect of various work executed by them in these mines initiated proceedings against them for recovery of service tax of ₹ 72,73,737/- under the category of si .....

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nalty under Section 76 of Finance Act, 1994. 2. The learned Counsel appearing for the appellant submitted mainly on the following grounds : (a) by examining the scope of the work undertaken by the appellant as available in the tender documents it is clear that the appellants have entered into composite contract involving various work like drilling, cross cutting, conventional raising, ramp excavation, long hole blasting, withdrawal of blasted ore etc. w.r.t. underground mines already in operatio .....

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ing inclusion of value of free items supplied by Hindustan Zinc Limited in the taxable value reliance was placed on the Larger Bench decision in: Bhayana Builders (P) Ltd. vs. CST, Delhi reported in 2013 (32) S.T.R. 49 (Tri. - Del.) : 2013 - TIOL - 1331 - CESTAT - DEL LB; (d) w.e.f. 01/6/2007, the appellants are liable to service tax under mining services which they have discharged, though with some delay. The service tax amount alongwith applicable interest has already been discharged much befo .....

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. In any case, it could be seen from the Board's circular dated 12/11/2007 w.r.t. certain disputes relating to service tax applicability to mining sector the clarification was issued after obtaining feed back from the stake holders. In such situation there cannot be any allegation of suppression on the part of the appellants. As such the penalty imposed is not sustainable. 3. The learned AR contested the submissions of the appellant mainly on the following grounds : (a) the appellants were e .....

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ed against appellant. 4. Heard both the sides and examined the appeal records. On the first issue regarding appellant's service tax liability prior to 01/6/07 under the category of site preparation we find on careful consideration, of the terms of agreement with Hindustan Zinc Limited that these services are primarily w.r.t. mining of ore. The agreements are composite involving various connected work with main objective being raising of ore. Similar issue has been subject matter of decision .....

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overall contract for mining the contract being indivisible the same should be treated as mining contract. It was also held that w.e.f. 01/6/2007 when the activity of the appellant has been accepted by the Department as mining service, for the period prior to 01/6/2007 the same activity cannot be classified under site formation service. We find that the impugned order cannot be sustained on this ground. 5. Regarding inclusion of value of free supply items for service tax purpose the matter has be .....

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