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TMI Blog2023 (11) TMI 1082X X X X Extracts X X X X X X X X Extracts X X X X ..... ditional Director General (ADG), DGCEI, Chennai issued Show Cause Notice dated 9.10.2015 proposing to demand service tax from the appellant. After due process of law, the adjudicating authority confirmed the service tax of Rs.8,74,99,061/- with interest under the head 'Mining Service'; Rs.60,54,133/- with interest for the services 'Site Formation, Clearance, Excavation, Earth Moving and Demolition Service' and Rs.4,06,83,917/- with interest for 'Supply of tangible goods service'. The adjudicating authority also imposed penalty of Rs.13,42,37,111/- on the appellant under section 78 of the Act and under section 77(1)(a) and 77(2) of the FA 1994. Aggrieved by the above order, the appellant is before the Tribunal. 3. No cross-objection has been filed by the respondent-department. 4. We have heard learned counsel Shri K. Sankaranarayanan for the appellant and Shri N. Satyanarayanan, learned AR for Revenue. 4.1 The learned counsel for the appellant submitted that since the show cause notice was issued by the ADG DGCEI, Coimbatore Zonal Unit answerable to the Commissioner, Coimbatore, the adjudication could not be done by the Commissioner, Coimbatore. On a combined reading of sub secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rival parties. The appeal raises a preliminary challenge to the jurisdiction of the adjudicating authority to adjudicate the matter. The other issues pertain to (i) quarrying of river sand, (ii) leasing services and (iii) site formation service. We shall take up these issues sequentially. All the issues taken up for consideration are listed below for ease of reference. S. No. Subject Para No. Page No. 1. Jurisdiction of the Adjudicating Authority 6 5 2. Mining Service 7 18 2(a) Exigibility of minor mineral 7.3 19 2(b) 'In relation to' mining alone is taxable 7.4 22 2(c) Constitution exempts the property and income of a State from Union taxation 7.5 23 2(d) Sand is excisable goods classifiable under CETA Heading 2505 and can't be taxed under service tax 7.6 26 2(e) The sand is sold hence VAT is applicable and not service tax 7.7 29 2(f) The appellants services are covered under works contract 7.8 30 2(g) Exemption for services rendered to a governmental authority 7.10 32 2(h) Mining services in case of Neyveli Lignite Corporation 7.11 33 3. Leasing Services 8 34 4. Site formation, clearance, excavation, earthmoving and demoli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act. Notification 22/2014 S.T. dated 16.09.2014 appoints inter alia the Additional Director General as Central Excise Officers and invests them with all powers under Chapter V of the Finance Act, 1994, and rules made there under, as are exercisable by Central Excise Officers of the corresponding rank i.e., the Commissioner. As such, it is clear that the Additional Director General, DGCEI, has been vested with the necessary jurisdiction and therefore the argument that the subject Show Cause Notice has been issued without jurisdiction is not tenable. It is also clear from the above that the noticee's argument regarding the exercise of jurisdiction by the officer in the higher hierarchy and the likelihood of bias does not arise since both the officers are in the equivalent rank. As regards the powers of adjudication of the Commissioner, Notification 30/2005-S.T. dated 10.08.2005 as amended issued under the powers conferred by Section 83 A of the Finance Act, 1994 mandates that the Commissioner of Central Excise can adjudicate cases where the service tax is above Rs. 2 Cror ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l the Commissioners of Central Excise have been given the powers of Adjudication and investigation of such cases, as may be assigned by the Board. 26th June, 2001 Notification No. 39/2001-Central Excise (N.T.) G.S.R. 468(E). In exercise of powers conferred by sub-rule (1) of rule 3 of the Central Excise (No.2) Rules, 2001, the Central Board of Excise and Customs appoints the officers of Central Excise specified in Column (2) of the Table below, and invests them with all the powers of Central Excise Officers specified in column (3) of the said Table, to be exercised within such jurisdiction and for such purposes as specified in columns (4) and (5) of the said Table respectively with effect from 1st July, 2001 TABLE S. No. Central Excise Officers Central Excise Officers whose powers are to be exercised Jurisdiction Purposes (1) (2) (3) (4) (5) 1. All the Commissioners of Central Excise The Commissioners of Central Excise Throughout the territory of India Adjudication and investigation of such cases as may be assigned by the Board 2. Commissioners of Central Excise (Adjudication) Chennai, Delhi and Mumbai The Commissioners of Central Excise Throughout the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Superintendent 7. Inspector 2. Officers of Directorate General (Vigilance), namely:- 1. Director General (Vigilance) 2. Additional Director General 3. Additional Commissioner (Vigilance) 4. Joint Commissioner (Vigilance) 5. Deputy Commissioner or Assistant Commissioner (Vigilance) 1. Chief Commissioner 2. Commissioner 3. Additional Commissioner 4. Joint commissioner 5. Deputy Commissioner or Assistant Commissioner 3. Officers of Directorate General of Revenue Intelligence, namely:- 1. Director General 2. Additional Director General 3. Additional Director 4. Joint Director 5. Deputy Director or 6. Senior Intelligence Officer 7. Intelligence Officer 1. Chief Commissioner 2. Commissioner 3. Additional Commissioner 4. Joint Commissioner 5. Assistant Commissioner 6. Superintendent 7. Inspector 4. Officers of Directorate General of Central Economic Intelligence Bureau, namely:- 1. Deputy Director General 2. Assistant Director General 3. Senior Technical Officer 4. Intelligence Officer 1. Commissioner 2. Joint Commissioner 3. Assistant Commissioner or Deputy Commissioner 4. Inspector 5. Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of service tax due, or erroneously refunded. Vide notification No. 38/2001 (supra) the Central Board of Excise and Customs has appointed and invested DGCEI officers powers of Central Excise Officers. It is hence clear that the DGCEI officer who issued the notice is a Central Excise Officer empowered to issue a show cause notice. 6.5 Relevant portions of Section 73 of FA 1994 as it stood on 13/05/2005, reads as under:- 73. Recovery of service tax not levied or paid or short-levied or short-paid or erroneously refunded (1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the 2[Central Excise Officer] may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED . . . . (1A) . . . . . (1B) . . . . (2) The 4[Central Excise Officer] shall, after considering the representation, if any, made by the person on whom notice is served unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Officer having jurisdiction in the matter. Whereas section 73(2) caters to the issue of a speaking order. It is a quasi-judicial function to be discharged by an officer/ authority who has been empowered to do the same. A speaking order discloses the reasons for the Adjudicating Authority in passing a particular order and provides the noticee and the department an opportunity to understand the issues and law involved and also provides for an objective review of the order by appellate/ judicial bodies in case of an appeal by either of the contesting parties. The powers to investigate, conduct audit, adjudicate etc. are separate powers. As seen earlier Rule 3 (1) of the Central Excise Rules 2002 empowers the Board to appoint officers to exercise all or any of the powers conferred by the Act or Rules. Hence so long as the officer has the jurisdiction to issue a notice there is no infirmity in his action. Having completed this action it cannot be insisted that the same officer should also adjudicate the matter. 6.8 The issue whether DGCEI officers who has been vested with the powers under the impugned Notification No.22/2014-S.T., dated 06.09.2014, are "Central Excise Officers" or no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Boards of Revenue Act, 1963 (54 of 1963). 150. Thus, by default all the officer of Central Excise Department are "Central Excise Officers". Apart from them such other officers including an officers of the State Government invested by the Board constituted under the Central Boards of Revenue Act, 1963 with any of the power of a Central Excise Officer under the Act are "Central Excise Officers". 151. It is under Rule 3 of the Central Excise Rules, 2002 the Board appoint such person as it thinks fit as "Central Excise officers" to exercise all or any of the powers conferred by or under the Act and Rules. ***** ***** ***** 153. Thus, it is clear that any person (including an officer of the State Government) invested by the Central Board of Excise and Customs constituted under the Central Boards of Revenue Act, 1963 (54 of 1963) with any of the powers of a Central Excise Officer under this Act are "Central Excise Officers". It is the Board which can delineate the Jurisdiction under Rule 3 of the Central Excise Rules, 2002. 154. Such officers may exercise the powers and discharge the duties conferred or imposed by or under the Act or these rules on any other Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. 195. No restriction can be inferred on the powers of the Board while appointing the officers of the Directorate of Central Excise Intelligence (DGCEI) [presently The Directorate of GST Intelligence] to act as "Central Excise Officers". 196. Thus, it cannot be said that the officers who has been vested with the powers under the impugned Notification No.22/2014-S.T., dated 06.09.2014, are not the "Central Excise Officers". (emphasis added) Thus, DGCEI officers who had been vested with the powers under the Central Excise Act, 1944 were held to be "Central Excise Officers". 6.9 The issue relating to the jurisdiction vested in a Central Excise officer came for consideration before the Hon'ble Supreme Court in Pahwa Chemicals Private Limited Vs Commissioner of Central Excise, Delhi, [2005 (181) E.L.T. 339 (S.C)]. In the said case the powers of the Board under provisions of the Act were examined at paragraph 13 of the said judgment. It was observed that Section 2(b) defines the "Central Excise Officer" and it is mentioned therein that any Officer of the Central Excise Department or any person who has been invested by the Board with any of the powers of the Central Excise Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atural justice violated. In fact, the initial officers mentioned in the section were 'Deputy Commissioner / Assistant Commissioner' which was replaced by the words 'Central Excise Officer'. The section was thus expanded and made broader to bring in its fold any other officer of the Central Excise Department or officers of the State Government etc. so invested by the Board to be a Central Excise Officer. The words 'the' preceding 'Central Excise Officer' thus stands for the Central Excise Officer who is empowered to issue a notice / adjudicate the matter as per law. It clearly excludes any other Central Excise Officer from doing the same and hence the phrase 'the Central Excise Officer' appears both in Section 73(1) & (2) of FA 1994. Hence it is clear that both the SCN and the impugned order does not suffer from the vice of jurisdictional error. Accordingly, we do not find any merit in this argument. 7. Mining Service 7.1 It would be relevant to reproduce the legal provisions relating to Mining service for a better understanding of the issues involved. Para 24.6 of the impugned order is hence reproduced below: "24.6. As regards Mining Services, as per Section 65(105) (zzzy), pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut by the appellant the word, "mineral" is defined in Section 3(a) of Mines and Minerals (Development and Regulation) Act.1957 (No 67 of 1957) (MMDR Act) to state that "minerals" includes all minerals except mineral oils. The appellant's plea that sand being a minor mineral will not get covered under sec. 65(105)(zzzy) as it applied only to mining of mineral, oil or gas and not to sand is not correct. The term 'all minerals' would include 'minor minerals'. The separate definition of 'minor minerals' under the MMDR Act does not take sand outside the scope of 'minerals'. Definitions as the word suggests only define the key terms used in the statute for a separate treatment in law were warranted by specific provisions of MMDR Act only. These have no relevance under FA 1994. For example, the Central Government has notified sand as a minor mineral under the Mines and Minerals (Development and Regulation) Act, 1957 for the purpose of the quarrying of sand being regulated by the state governments. These regulatory powers over minor minerals do not hinder the levy of service tax on taxable activities in relation to mining under FA 1994. 7.3.1 The activity as under taken by the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the service receiver. It is this principle of equivalence which is inbuilt into the concept of service tax under the Finance Act, 1994. That service tax is, therefore, a tax on an activity. That, service tax is a value added tax. The value addition is on account of the activity which provides value addition...Thus, service tax is imposed every time service is rendered to the customer/client...Thus, the taxable event is each exercise/activity undertaken by the service provider and each time service tax gets attracted." (emphasis supplied) From the activities of the appellant it is clear that they are rendering taxable service to PWD in the quarrying and loading of the mineral i.e. sand which is leviable to service tax. The tax is sought to be levied on the 'taxable service' in relation to mining and not on the goods that have been quarried. In Shreem Coal Carriers Pvt. Ltd. v. Commissioner [2015 (37) S.T.R. 1067 (Tribunal)], a coordinate Bench of this Tribunal held: "5.3 In respect of one of the contracts, we notice that the same relates to mining of sand from the riverbed and transporting the same to the Western Coalfield's mining area. Sand is a minor mineral and therefo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) The Hon'ble Court held that service tax is a value added tax which, in turn, is a general tax applicable to all commercial activities involving provision of service. That the imposition of service tax is not a tax on land and building as enumerated under Entry 49 of List II, what is being taxed is an activity, which implies letting and leasing the immovable property for commercial and business purpose and its furtherance. Similarly in the case of quarrying for sand the tax is on the value added activity and not on the sand per se. In other words, what is sought to be taxed is the activities in relation to 'mining' and not 'mining' itself. Hence this plea does not succeed. Constitution exempts the property and income of a State from Union taxation 7.5 Another plea taken by the appellant is that they are exempt as sand is the property of the Government of Tamil Nadu (PWD). It is seen that Article 289 of the Constitution exempts the property and income of a State from Union taxation. In re. The Bill to Amend the Sea Customs Act (1878), [1963 AIR 1760/ 1964 SCR (3) 787] pertaining to indirect taxation, a Special Bench of eight judges of the Hon'ble Apex Court exercising its adviso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ortation of goods. . . . 33. Similarly in the case of duties of customs including export duties though they are levied with reference to goods, the taxable event is either the import of goods within the customs barriers or their export outside the customs barriers. They are also indirect taxes like excise and cannot in our opinion be equated with direct taxes on goods themselves. Now, what is the true nature of an import or export duty? Truly speaking, the imposition of an import duty, by and large, results in a condition which must be fulfilled before the goods can be brought inside the customs barriers, i.e., before they form part of the mass of goods within the country. Such a condition is imposed by way of the exercise of the power of the Union to regulate the manner and terms on which goods may be brought into the country from a foreign land. Similarly an export duty is a condition precedent to sending goods out of the country to other lands. It is not a duty on property in the sense of Art. 289(1). Though the expression "taxation", as defined in Art. 366(28), "includes the imposition of any tax or impost, whether general or local or special", the amplitude of that definit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vice as defined under Section 65 (105) (zzzy) of FA 1994. Sand is excisable goods classifiable under Central Excise Tariff Heading 2505 and can't be taxed under service tax 7.6 The appellant has stated that mining activity or quarrying of sand results in the emergence of a distinct commodity amounting to manufacture and is not leviable to Service Tax. They have referred to two judgments of the Apex court to support their view that extraction of iron ore amount to manufacture. i.e. CIT Vs N.C. N. C. Budharaja and Co. [1973 (204) ITR 413] and Commissioner of Income Tax Vs Sesa Goa Ltd [2004 (271) ITR 331 (SC)]. It is seen that both the judgments have been rendered in the context of the provisions of the Income Tax Act. It has been held by a Constitution Bench of the Apex Court in Hari Khemu Gawali v. Deputy Commissioner of Police, Bombay and another [AIR 1956 SC 559], as under: "It has been repeatedly said by this Court that it is not safe to pronounce on the provisions of one Act with reference to decisions dealing with other Acts which may not be in pari materia." Hence we need to examine the matter in detail on merits in the context of FA 1994. 7.7 In the pre-Service Tax reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that service tax is a value added tax and that just as excise duty is a tax on value addition on goods, services tax is on value addition by rendition of services. The Hon'ble Supreme Court in In re, Sea Customs Act, [AIR 1963 SC 1760] has contrasted sales tax with excise duty and observed that in case of sales tax, the taxable event is an act of sale. Therefore, though both excise duty and sales-tax are levied with reference to goods, the two are very different imposts; in one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. In Carlsberg India Private Limited Vs Union of India & Ors. [W.P.(C)--1120/2015. Dt 05/08/2016], the Hon'ble High Court of Delhi examined the legislative competence of the Union to enact legislation on the service aspect of the contract of manufacturing on behalf of the principal manufacturer/brand owner. It was held: "The central thrust of the Petitioners' argument is that Parliament lacks the legislative competence to enact the said amendments since the activity manufacture of alcoholic liquor for consumption, whether for oneself another person, lies exclusively within the domain of the State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sand and loading in the lorries/ tippers of the consumer and his services ends on the completion of the said activities. Payments of service tax as also the VAT are mutually exclusive. Hence, he is not involved in the sale of sand. He is also not paying VAT on the said activity. The Hon'ble Supreme Court in In re, Sea Customs Act, (supra) has contrasted excise duty with sales tax. In one case the imposition is on the act of manufacture or production while in the other it is on the act of sale. Similarly in this case the tax is levied on the value addition done due to the service rendered. As stated in All India Federation of Tax Practitioners (supra) service tax is a value added tax and is on value addition by rendition of services. As stated by the Apex Court in Association of Leasing and Financial Service Companies (supra), service tax is imposed every time service is rendered to the customer / client. Thus, the taxable event is each exercise / activity undertaken by the service provider and each time service tax gets attracted. Hence it is possible to distinguish service tax from VAT. This satisfies the law that one transaction can be either a service or a sale hence both VAT a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to a main contractor, Section 68 of the Act provides that every person, which would include a sub-contractor, providing taxable service to any person shall pay Service Tax at the rate specified. Therefore, in the absence of any exemption granted, a sub-contractor has to discharge tax liability. The service recipient i.e. the main contractor can, avail the benefit of the provisions of the CENVAT Rules. Exemption to PWD for the statutory functions as defined by statue which were covered under 243 W/243G for the impugned activities relating to mining are examined below. Exemption for services rendered to a governmental authority 7.10 The appellants final plea has been that in case if mining activity is treated as service their eligibility for exemption may be considered as negative list or exemption under Notification No. 25/2012 dated 20/06/2012, Sl. No.39: 39. Services by a governmental authority by way of any activity in relation to any function entrusted to a municipality under article 243 W of the Constitution. as amended by Notification No. 22/2016-Service Tax dated 13/04/2016 by which the following entry among others was inserted: 60. Services by Government, a local a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the value of the service on which service tax is to be calculated. Hence if the benefit of cum-tax calculation has not been given by the department to the appellant the same should be given. 8. Leasing services 8.1 The appellant is of the view that they do not render services of supply of tangible goods for use. The transaction is the one of transfer of right to use goods, which is not leviable to service tax. For the period prior to 01-07-2012 Section 65 (105) [(zzzzj) taxable service means any service provided or to be provided to any person, by any other person in relation to supply of tangible goods including machinery, equipment and appliances for use, without transferring right of possession and effective control of such machinery, equipment and appliances. After 01-07-2012 as per Section 66 E (f) transfer of goods by way of hiring. leasing, licensing or in any such manner without transfer of right to use such goods was a declared service. Their transactions were deemed sales defined in Article 366(29A) of the Constitution and hence it will not attract service tax. 8.2 The Apex court in its judgment Rashtriya Ispat Nigam Ltd. vs Commercial Tax Officer [[1990] 77 STC 182 AP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt which has a double aspect. It is the acquisition of a right by the transferee, and loss of it by the transferor. The vestitive fact, if considered with reference to the transferee is a derivative title, while from the point of view of the transferor it is an alienative fact." (Salmond on Jurisprudence - Twelfth Edition at pages 332 and 333.) 8. In Corpus Juris Secundum "transfer" is defined : "The common use of the word 'transfer' is to denote the passing of title in property, or an interest therein, from one person to another, and in this sense the term means that the owner of property delivers is to another person with the intent of passing the rights which he had it to the latter." (Corpus Juris Secundum, Vol. 87, page 892.) 9. The essence of transfer is passage of control over the economic benefits of property which results in terminating rights and other relations in one entity and creating them in another. While construing the word "transfer" due regard must be had to the thing to be transferred. A transfer of the right to use the goods necessarily involves delivery of possession by the transferor to the transferee. Delivery of possession of a thing must ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn arrangements of drivers, cleaners etc. 4. The number of lorries to be supplied is decided between the First and Second party from time to time and will be intimated by the Second party by a simple letter. 5. The charges for the supply of lorries shall be monthly basis. The rate per month or year is to be fixed mutually depending upon market conditions and is revisable from time to time. 6. That the fuel and minor repairs shall be borne by the Second Party and has to keep the vehicle in good condition. Major repairs if any shall be borne by the first party. 7. That the lorries will be solely used by the Second party for his legitimate business purposes. No unauthorized / prohibited / hazardous chemicals, inflammables goods shall be transported. The Second party shall also not sublet the lorries to anybody in any form whatsoever. 8. The Second party shall not make any additions or alterations in the lorries. Insurance including third party insurance shall be at the cost of the First party and so also the Annual Road Tax/Vehicle License, fitness certificate required to be obtained under the Motor Vehicles Act, 1988. However Insurance on the goods including transit insuran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... control', in the impugned context, is a legal concept that refers to the transfer of the ability to make decisions about and manage the tangible goods. It means acquisition of a right by the transferee and loss of it by the transferer. Due to the transfer, the transferee must gain the ability to make decisions about and manage the tangible goods i.e the lorry etc. This includes among other things the ability of the transferee to freely: i. decide where to station the lorry ii. decide (a) how (b) when and (c) for whom to use the lorry iii. decide who has access to the lorry iv. decide about the maintenance of the lorry during the period of lease v. decide the persons who will operate the lorry and have full control over these persons The agreement reproduced above satisfied these conditions. However, it is seen from paras 7 and 12 of the contract above that the transferee i.e. the Second party shall not sublet the lorries to anybody in any form whatsoever and at para 12 that no, part of the lorry or right in lorry is transferred nor any second party is entitled to avail any credit facility from any bank or financial institution or third party. 8.6 A question arises wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it has been held that the transfer of right is the sine qua non of the right to use any goods. Hence, since the other conditions stated above in the impugned agreement are satisfied 'effective control' can be said to have been established by the customer-transferee. 8.7 In a deemed sale the term transfer of 'right of possession' means that the ownership rights are transferred by the transferor to the transferee so as to enable the transferee to use goods at his own will to the exclusion of the transferor. This implies that full liberty is vested in the transferee to have the right to use goods to the exclusion of all other including the owner of goods during the period of the agreement. 8.8 A three judge Bench of the Hon'ble Supreme Court in Commissioner of Service Tax, Ahmedabad Vs M/s Adani Gas Ltd. [Civil Appeal No. 2633 of 2020] has examined the law pertaining to supply of tangible goods and has laid out the test for determining whether a taxable service of supply of tangible goods has occurred. It stated as under: "13. Section 65(105)(zzzzj) of the Finance Act 1994 provides for taxability of supply of tangible goods for use, without transferring right of possession and ef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... continues to be with the service provider; and (vi) The goods are supplied for use by the recipient of the service. There is an element of service which is the foundation for the levy of the tax" 8.9 From the agreement for supply of lorry in the impugned case it is seen that Shri K Diwakar (second party) must make his own arrangement for driver, cleaner etc. The charges for the supply of lorry are on a monthly basis. Fuel and minor repairs are to be borne by the second party. Insurance of goods including transit insurance shall be at the cost of the second party. The supply under the agreement is for capital equipment as a whole. The second party is entitled to the peaceful holding, possession, and use of the lorry without any interruption or disturbance during the terms of the agreement. Although the appellant takes care of major repairs, pays for insurance of the vehicle including third party insurance and has the right to inspect the vehicle, the agreement indicates that full control of the lorry had been given to the second party to use the lorry exclusively during the validity of the agreement. The impugned order has noted that there is a duality of control, and the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with section 14 of the Central Excise Act 1944. Statements given during the investigation have also not been retracted. Once a query has been raised by Revenue adverse inference could be drawn against the assessee if they are not able to provide a satisfactory reply. The initial burden of rebuttal is on the assessee because the basic facts are within their special knowledge. Even as per section 106 of the Indian Evidence Act, the fact within the knowledge of a person must be proved as the burden of proof is cast upon him. The Apex Court in A. Raghavamma v. A. Chenchamma [AIR 1964 S.C. 136] held: "When sufficient evidence either direct or circumstantial in respect of its contention is disclosed by the Revenue, adverse inference could be drawn against the assessee, if he failed to put before the Department, material which, he was in exclusive possession. This process is described in the law of evidence as shifting of the onus in the course of a proceeding from one party to the other." Hence in those cases where the appellant was unable to produce a contract for supply of vehicles or to prove its terms, despite being asked to do so they have not shown that effective control of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (44) of Finance Act, as under "Service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an activity which constitutes merely,- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of article 366 of the Constitution; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment, (c) fees taken in any Court or tribunal established under any late for the time being in force. 9.3 It appears from the depositions made by Shri. M. Pradeep, Senior Manager (F&A) of M/s. GVR Infra Projects Ltd., Chennai in his statement recorded on 24.02.2015, Shri. V.Srinivasan, Accountant, M/s. NAPC Ltd., Chennai in his statement recorded on 30.01.2015 and Shri. K. Pattabiraman, Assistant Manager (Indirect Taxes), M/s. Larsen & Toubro Ltd., Chennai in his statement recorded on 27.01.2015 that Shri. M. Palanisamy provided services such as jungle cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y etc. Services provided to NAPC, L&T, GVR etc. will not get the benefit of this exemption as the taxable service is not provided by the appellant to Government, a local authority or a governmental authority nor are the principal activities meant for construction of roads etc. The activities hence get covered under the definition of taxable service as per Section 65(105)(zzza) of FA 1994 and are liable to discharge duty accordingly without the benefit of exemption under Sl. No. 13 of Notification 25/2012 dated 20.6.2012. 10. Extended Period not Invokable 10.1 The appellant has submitted that the demand has been confirmed invoking extended period of time which is incorrect and unwarranted. In the present case, the period covered by the impugned order is from 2010 to 2015. The Show Cause Notice is dated 9.10.2015. Therefore, the maximum period upto which the demand can be imposed is only till October 2013 and the demand from 2010 to October 2013 merits to be set aside. There was never a suppression of facts to the department. Audit has been conducting periodical verification of accounts during the alleged period. They have been filing ST-3 returns and TR6 forms regularly in which t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Del.) g. CCE Vs. Gujarat Intelligence Security (India) - 2011 (24) STR 167 (Guj.) 10.2 We find that the appellant has not enclosed any of the judgments cited along with their appeal or written submissions. We examine the matter on the accepted principle that it is neither desirable nor permissible to pick out a word or a sentence from a judgment divorced from the context of the question under consideration and treat it to be complete law. 10.3 This is a case where the appellant is registered with the Service Tax Department for the categories of "Works Contract Services" and "Transport of goods by road/goods transport agency services' and has rendered a host of services without informing about these activities to the department through the statutory returns being filed by them or otherwise. They have been awarded with the contract of quarrying of sand and loading the same onto customers vehicles using their own labourers for the past 12 years. In the 'Statement of Facts' (SOF) of their appeal, they admit to owning "1000 Numbers Trucks and 300 Number Poclains". The SOF notes that the investigation alleges that no written agreements were executed by them for the hiring of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed period for issue of SCN has rightly been invoked under the proviso to sub-section (1) of section 73 of FA 1994. None of the judgments cited by the appellant can serve as a precedent, without advertence to its facts. Each judgment is thus an authority in the setting of its own facts. The judgments cited by the appellant in Scott Wilson Kirkpatrick; Spiced Communication (P) Ltd.; Umakanth & Co., BPL Ltd.; India Colour Lab; Uniworth Textiles Ltd.; Anand Nishikawa Co. Ltd., and Padmini Products Ltd. (supra) are hence distinguished. NO PENALTY IMPOSABLE 11. The appellants plea against penalty also does not sustain as there was no substantial interpretation of law involved. The question regarding the adjudication by the Commissioner on a SCN issued by the Additional Director General DGGI does not have a bearing on their nonpayment of tax. Similarly, their plea that no tax is payable on mining activity, is also not correct. Relevant statutory provision admits no ambiguity. The grammatical meaning of the taxing provision is in conformity with its legal meaning. Having had the experience of 12 years in the field and when they did not pay sales tax / VAT they should have paid Service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er as per law. It clearly excludes any other Central Excise Officer from doing the same and hence the phrase 'the Central Excise Officer' appears both in Section 73(1) & (2) of FA 1994. Thereby both the SCN and the impugned order do not suffer from the vice of jurisdictional error. D. The term 'all minerals' would include 'minor minerals'. Service tax is sought to be levied on activities where service is rendered and not on the mined sand per se. Hence the nature and characteristics of the mineral does not matter. In other words, what is sought to be taxed is the activities in relation to 'mining' and not 'mining' itself. E. In a majority decision in re. The Bill to Amend the Sea Customs Act (1878), (supra) the Hon'ble Chief Justice speaking for himself and four other Judges held that the immunity granted to the States in respect of Union taxation, under Art. 289(1) does not extend to duties of customs including export duties or duties of excise. The ratio of this judgment would also be applicable to an indirect tax like service tax which is a later levy. F. Where goods are specified in the schedule to the Central Excise Act, I944, they are excisable goods but whether such go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liable to pay duty along with interest under the taxable service of supply of tangible goods as determined in the impugned order. N. The appellant has provided composite services to NAPC and GVR such as jungle clearance, earth formation, earthmoving, solving of local problems, getting required permission for all concerned departments, transportation of materials from borrow area to work site by utilizing his vehicles Tipper and Taurus and also supply of required manpower for the completion of such services. The activity is hence a composite activity of 'site formation' even in those cases where a part of the service may involve formation of roads. O. Services provided to NAPC, L&T and GVR etc. will not get the benefit of exemption meant for governmental authority as the taxable service is not provided by the appellant to Government, a local authority or a governmental authority. P. There is a positive act of suppression on the side of the appellant showing willful suppression on their part. Hence suppression of information with intention to evade payment of duty is established. In this era of self-assessment, the facts would not have been revealed had investigations into the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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