TMI Blog2008 (10) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... Sl. No. Appeal No. OIO No. Period involved Service Tax Penalties 1 ST/101/07 05/06-ST dt. 5-12-06 16-6-05 to 31-12-05 1,57,69,163 Rs. 100/- u/s. 76 Rs. 1000/-u/s. 77 Rs. 1,57,69,163/- u/s. 78 2. ST/341/07 01/07-ST dated 31-5-07 1-1-06 to 30-6-06 1,84,35,101 Rs. 100/- u/s. 76 Rs. 1000/- u/s. 77 Rs. 1,84,35,101/- u/s. 78 The Revenue has also filed the cross-objection. Since the issue is common, we are passing a common order. 2. Shri C. Natarajan the learned Advocate appeared on behalf of the appellants and Ms. Sudha Koka, the learned SDR, appeared for the Revenue. 3. We heard both sides. 4. The issue involved in the present appeals is whether the appellant would be liable for Service Tax during the relevant period under the category of "site formation and clearance, excavation and earthmoving and demolition services." The appellant has been awarded with the work of mining Barytes Ore from the depth ranging from 42 to 100 Mtrs, from the surface by Andhra Pradesh Mineral Development Corporation Ltd. (APMDCL). APMDCL is executing Management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e formation and clearance, excavation and earthmoving or leveling are normally undertaken for a consideration to make the land suitable for such activities". Therefore, it is clear that the service tax is liable to be paid only on those services which are undertaken as preparation services for making the land suitable for certain activity. (b) The appellant is not attending to any work relating to Site Formation, which may make the 162.5 Hec. of land suitable for the purpose of mining. On the contrary, the appellant has been awarded with the work of mining Barytes Ore from a depth ranging from 40 to 100 Mtrs. from the surface. (c) The word 'mining operation' has not been defined in the Act, may be for the simple reason that it is not the intention of the Government to levy tax on the operations of mining during the relevant period. As per Clause (d) of Section 3 of The Mines and Minerals (Development Regulation) Act, 1957 "mining operation" means any operation undertaken for the purpose of winning any mineral" and that is what precisely the Contractor is doing for and on behalf of the APMDCL and not doing any reconnaissance operations for the purpose of preliminary prospectin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n. Our attention was invited to the definition of 'Site Formation' and it was emphasized that excavation is clearly included in the said services. Reliance was placed on Ministry's clarification dated 27-7-2005. It was stated that the intention of the Government is to include such services undertaken prior to the activity of mining in the category of "Site Formation Services". The appellants have to obtain the ore by way of blast hole drilling and blasting and excavation/removal of overburden by whatever name, the process be called (such as mining etc.). The activity of excavation of excavation/removal of overburden itself renders the services undertaken by the appellants squarely fit into the definition of the service and non-inclusion of the word "mining" does not exempt the appellants' services from falling within the definition. The conclusion of the adjudicating Authority is based on the fact that the appellants are undertaking the work of excavation and removal of overburden and these activities are very much a part of the relevant definition. It is not the contention of the Adjudicating Authority that the appellants have been undertaking site formation services alone. The Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly the ore is at a depth ranging from 40 to 100 Mtrs. from the surface. The Overburden mainly consists of top soil of about 5 Mtrs. followed by white shale up to 25 to 30 mtrs. and balance is black shale up to ore body. The white shale is soft for excavation when compared with black shale. The black shale is harder. Our experience reveals that on blasting, the powder factor in white shale is 2.5 to 4 Cu. M per kg. of explosives while it is 1.35 to 2 Cu. M in respect of black shale. The average powder factor in respect of ROM is 7 to 8 MTs per Kg. of explosives. The development in the mine facilitates movement of heavy vehicles up to the level of 120 Mtrs. where the present operations are going on. The Corporation is undertaking the job of dewatering from the mines and the Tenderer's responsibility with regard to dewatering is only providing men and machinery required for shifting of the pumps from level to level depending on the rise and decrease of water levels. The above information is general in nature and given for the information of the tenderers. However, the tenderers may have to visit the Project site and study all the aspects and submit the bid. Name/Scope of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 45,00,000 45,00,000 1,35,00,000 Depth in terms of R.L 1st Year 2nd Year 3rd Year Total quantity in Metric tonnes 140 and below 15,00,000 15,00,000 15,00,000 45,00,000 10.1 From the above, it is very clear that the salient feature of the services rendered by the appellant is mining. In other words, the appellant is expected not only to remove the overburden but also to excavate the Barytes Ore. We cannot say that the appellant is not undertaking site formation work, but site formation work undertaken by the appellant is incidental to the mining activity. To put it in different words, the essential character of the work undertaken by the appellant is mining or winning of minerals. The mining services became taxable only with effect from 1-6-2007. The period in the present case is prior to 1-6-2007. It cannot be said that the entire service rendered by the appellant comes under the category of site formation. If that were so, one cannot say that it also falls under "Mining Services." In any case, Section 65A (2) of Chapter V of the Finance Act, 1994 reads as follows: "When for any re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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