TMI Blog2019 (3) TMI 864X X X X Extracts X X X X X X X X Extracts X X X X ..... Classification of services - Transportation of Limestone - Cargo Handling Service or Good Transportation Agency Service? - Held that:- The composite service may include various intermediary and ancillary services such as loading/ unloading, packing / unpacking etc. provided in the course of transportation of goods by road. These services are not provided as independent activity but as means of successful implementation of the principal service, namely the transportation of goods by road. It has, therefore, been clarified that a composite service even if it consists of more than one service, should be treated as a single service based on the main or principal service. It has, therefore, been held that any ancillary / intermediate service provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the Goods and Transport Agency and not by any other person. Such service would form part of Goods and Transport Agency Service and , therefore, the abatement of 75% would be available on it - It is apparent that the essential feature of the service is transportation. Loading and unloading are ancillary / intermediate serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 815 / per running hour for equipment having bucket capacity of 1.7 to 2.1 cum and min. output of 165 MT/hr. 5. ISSUE OF DISEAL 5.1 Diesel will be issued by the Company as Free Issue. 4. For the Dozer, the hiring charges was contained in clause 4.2 to be ₹ 815 for running hour per equipment. 5. Regarding the second contract for Transportation of lime stone , the agreement provided that the appellant had to transport the lime stone within the crushing area on the terms and conditions contained in the order. The scope of work provided that the appellant would be responsible for all aspects of collection of material, transportation and delivery of the same to the crusher hopper, as advised from time to time. The Appellant was required to maintain the quantity of transportation of limestone to a maximum of 15000 MT per week in such a manner that per day transportation was not less than 2300 MT. Consideration for the aforesaid contract was contained in clause 5.0. The Appellant was to be paid ₹ 29.60 per ton of the limestone delivered to the crusher as transportation charge, inclusive of the labour element to the extent of 10% (i.e. ₹ 2.96 per ton of li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding or supply of equipment but actually the noticee were under obligation to perform a wide spectrum of specialized activities as perform detailed below. The activities to be carried out by the noticee extended much beyond merely placing equipment at the disposal of service receiver. As per the agreement the noticee were responsible for excavation of lime stone, maintenance of site, quality of lime stone, deployment of labour, compliance with labour laws and other laws, handling of limestone, and transporting it upto crusher /hopper. These are evident from the following fact - (iv) Clause 2.4 and 2.5 are purely related to excavation and casts the responsibility to the noticee to maintain the floor level, width height of benches and not to excavate below the determined mean sea level. The noticee were required to deploy dozer to upkeep the mine s floor level and to maintain grizzly including the civil work for top berm and foundation at its cost and also to maintain the screening gap of 32 mm and structural members intact. Even for such purpose the contractor was to arrange all materials and consumable at his cost except rail pieces, round bars, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of activities was removing the lime stone from the surface areas which were blasted by M/s. ACL. The removal was basically by way of excavation for which they had employed excavators. They were to ensure the quality of excavation and further made responsible for transportation of lime stone to crushers. By no stretch of imagination the arrangement can be said to be supply of vehicle viz excavators, tippers etc as they were responsible for everything on mining site including the deployment of labour, their welfare etc. Moreover, they were to deliver specified output. 39. I find that the definition of Site Formation and clearance, excavation and earth moving and demolition service is an inclusive definition and the activities stated therein are merely illustrative and not exhaustive. I find that Shri Pradeep Jain in his statement has also admitted the excavators were used to excavate the lime stone after blasting done by M/s. ACL. The activities of excavation are squarely covered under the service under Site Formation and clearance, excavation and earth moving and demolition service . This position has also been clarified by the Board vide Circular No. 232/2/2006-Ex.4 dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that Shri Pradeep Jain, Dy General Manager (Finance Accounts) of M/s. ACL in his statement dated 5.4.11 admitted that Excavator were used to excavate the lime stone / reject from mining area after blasting by M/s. ACL. Tipper were used for shifting of excavated lime stone / reject from mining area to crusher area and reject area within the mining area; Dozer were used to level the reject yard and at mining face area within the mining area; Pay loader were used for collection of lime stone and loading the same to tippers within the mining area; and water tanker were used to sprinkle water on mining haulage within the mining area. 43. I further find from the definition of Cargo Handling services that it includes loading, unloading and excludes mere transportation of goods. In this case, the noticee was collecting the lime stone, transporting it and delivering it to the crusher/ hopper and had ensured deployment of sufficient equipment for handling the required quantity of lime stone. The argument of the noticee that these services were GTA services is devoid of any substance, because there was much more than transportation of goods by road and consignment note which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8377; 2,97,82,694/- ) under section 75, is paid within thirty days from the date of communication of this order and further subject to the condition that the benefit of reduced penalty (25% of ₹ 2,97,82,694/- ) shall be available if the amount of penalty so determined has also been paid within the period of thirty days from the date of communication of this order. (iii) I impose a penalty of ₹ 100/- per day upto 17.04.2006 and w.e.f. 18.04.2006 ₹ 200/- per day for the period during which such failure continued or at the rate of 2% of the amount of service tax due, per month, whichever, is higher, till the date of actual payment of outstanding service tax, subject to maximum of service tax amount outstanding and payable / late paid up to 9.5.2008 i.e. ₹ 2,97,82,694/- under Section 76 of the Finance Act, 1994. 14. Shri Rachit Jain, learned Counsel appearing for the appellant has challenged the findings recorded by the Commissioner. Learned Counsel pointed out that the Commissioner failed to appreciate the definition of Site formation as provided for under Section 65 (97(a) of the Act and in support of his submission, he placed reliance on case laws, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes, -- (i) Drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or (ii) Soil stabilization; or (iii) Horizontal drilling for the passage of cables or drain pipes or (iv) Land reclamation work; or (v) Contaminated top soil stripping work; or (vi) Demolition and wrecking of building, structure or road. But does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies. 18. At this stage, it is pertinent to refer to the Budget letter dated 27 July, 2005 of the Government of India, Ministry of Finance, Department of Revenue, relating to issue of Service Tax in the year 2005-2006. In relation to Site Formation it has been stated as under: 6. Site Formation and clearance, excavation and earth moving and demolition service 6.1 Any service provided or to be provided to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities is leviable to service tax under sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the presence of hydrocarbons or water along the length of the barehole. 20. On a reading of section 65 (105) (zzza) and the definition of site formation contained under section 65 (97a) and the budget letter dated 27 July, 2005, there is no manner of doubt that the service referred to is prior to the actual activity of mining. Drilling, boring and core extraction services for construction of geophysical, geological or similar purpose is carried out to determine the feasibility for digging any mine prior to mining and it is this service on which service tax is sought to be levied under section 65 (105) (zzza). 21. It is not the case of the department that the activity that was carried out by the appellant was prior to mining. 22. In such circumstances, it is not possible to accept the contention of the Department that the services would fall under the category of Site Formation . Second Issue : Cargo Handling Service or Good Transportation Agency Service 23. The Commissioner has found as a fact that; a.) the appellant was collecting lime stone, transporting it and delivering it to crusher/ hopper for which it deployed equipment for handling the quant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well-accepted principle of classification. As clarified earlier vide F.No. 334/4/2006-TRU, dated 28-2-2006 (para 3.2 and 3.3) [2006 (4) S.T.R. C30] and F. No. 334/1/2008-TRU, dated 29-2-2008 (para 3.2 and 3.3) [2008 (9) S.T.R. C61], a composite service, even if it consists of more than one service, should be treated as a single service based on the main or principal service and accordingly classified. While taking a view, both the form and substance of the transaction are to be taken into account. The guiding principle is to identify the essential features of the transaction. The method of invoicing does not alter the single composite nature of the service and classification in such cases are based on essential character by applying the principle of classification enumerated in section 65A. Thus, if any ancillary/ intermediate service is provided in relation to transportation of goods, and the charges, if any, for such services are included in the invoice issued by the GTA, and not by any other person, such service would form part of GTA service and, therefore, the abatement of 75% would be available on it. (emphasis supplied) 25. A perusal of the same shows that composit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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