TMI Blog2024 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... d Rs.25/- per metric tonne of iron ore fines raised and generated, thus, the activities undoubtedly indicate that the appellant has provided services which are akin to the category of mining of minerals service inserted in the Finance Act,1994 with effect from 1.6.2007. The activities undertaken by the appellant are composite in nature and involves not merely production of minerals but services before production and after production of the said minerals including building and maintenance of necessary infrastructure; hence, rightly covered under the scope of mining operations and not under Business Auxiliary service . The Tribunal following the circulars and the judgments rendered earlier in the case of M/s. G. S. Atwal Co. Engineers Pvt. Ltd. vs. CST, Kolkata [ 2023 (6) TMI 310 - CESTAT KOLKATA ] considering and comparing the three competing services viz. Cargo Handling service, Business Auxiliary Service and Site Formation and clearance, excavation and demolition services with that of mining services held that the activities carried out by the appellants, which are akin to the services rendered by the Appellant in the present case, fall under the scope of mining operations, hence, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 22.6.2006 proposing to recover Service Tax amount of Rs.1,55,17,723/- for the period 16.5.2005 to 31.03.2006 with interest and penalty. On adjudication, the demand was confirmed with interest and penalty. Hence, the present appeal. 2.1 At the outset, the learned advocate for the appellant has submitted that the appellant under the raising agreement with M/s. Mysore Minerals Ltd., mining lease holder in respect of mines in Jambunathanahalli village provided service for mining of iron ore from the said mine. Referring to various clauses of the said Raising Agreement dated 03.05.2003 including clause (21), the learned advocate has submitted that for the activities viz. to explore, develop, excavate, to extract, grade, screen, size, sort and stacking iron ores narrated in the said Agreement, the appellant had charged and received Rs.188/- per metric tonne to every ton of calibrated iron ore and Rs.25/- per metric tonne for iron ore fines raised and generated by them. It is his contention that in terms of the said Raising Agreement dated 03.05.2003, the appellant had undertaken and provided the services of mining operations which comprises of exploration, development, excavation, ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1994, hence, taxable only with effect from 01.06.2007 and not for the earlier period under any other taxable category. In support, he has referred to the judgment of the Hon ble Bombay High Court in the case of Indian National Shipowner s Association vs. UOI: 2009 (14) STR 289 (Bom.) upheld by the Supreme Court reported in UOI vs. Indian National Shipowner s Association: 2011 (21) STR 3 (SC). 2.5 Further, referring to the Circular No.334/1/2007-TRU dated 28.2.2007 issued by the Board, clarifying the scope of mining of mineral, oil or gas services after the introduction of the said levy in 2007 Union Budget and further clarification vide Circular No.232/2/2006-CX.4 dated 12.11.2007, he has submitted that the instructions issued under the said circular are clear, unambiguous and binding on the authorities. It is clarified that the activities of exploration, extraction of minerals and lifting them up to the pit head are classified under mining of minerals which has become taxable with effect from 1.6.2007. In support he has referred to the following judgments: (i) Tuli Construction Co. vs. CCE ST, BBSR-II: 2019 (25) GSTL 43 (Tri.-Kol.) (ii) CCE, C ST, BBSR II vs. Ores India (P) Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had been introduced. The Hon ble High Court held that the services rendered by the appellant would fall under the category of supply of tangible goods for use and not under the category of mining of mineral service since the activity had no direct nexus with the mining. In this context, an observation was made that Entry 65(105)(zzzzj) was inserted without amending the entry 65(105)(zzzy) and the latter entry is not a subspecies of the former. The Hon ble Apex Court upheld the judgment of the Bombay High Court, however, not affirmed the view that if a service is added later into the taxable service list, it automatically means that the activity was not covered by the earlier taxable category. Therefore, if it can be established that the activity carried out by the appellant is covered under Business Auxiliary Service , it should be taxable up to 01.06.2007 under the said category. 3.1 Referring to the judgment of the Hon ble Bombay High Court in the case of Commissioner of Income Tax vs. Sesa Goa (India) Ltd.: 2005 SCC OnLine Bom. 1650, learned Authorised Representative for the Revenue has submitted that from the observation of various High Courts referred to in the said judgment t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iary Service, the Revenue was trying to classify the service. Also, there is no reason as to why it is mining service and no Business Auxiliary for the period concerned. (iii) Hazaribagh Mining and Engineering Pvt. Ltd. vs. CCE ST, BBSR II: 2017 (49) STR 289 (Tri.-Kol.) The competing service is site formation service. (iv) CCE, C ST, BBSR II vs. B K Thakkar: 2008 (9) STR 542 (Tri.-Kol.) Competing service is cargo handling service whereas the contract was a composite contract. (v) CCE, Hyderabad vs. Vijay Leasing Company: 2011 (22) STR 553 (Tri.-Bang.) Competing service is site formation service. (vi) Balaj Mines and Minerals Pvt. Ltd. and Ors. Vs. CCE, Belgaum: 2020-TIOL-158-CESTAT-Bangalore competing service is site formation service. (vii) M. Ramakrishna Reddy vs. Commr. of C. Ex. Cus. Tirupathi: 2009 (13) STR 661 (Tri.-Bang.) Competing service is site formation service. (viii) Associated Soapstone Distributing Co. P. Ltd. vs. CCE, Jaipur-II: 2014 (34) STR 865 (Tri.-Del.) competing service is site formation service. 3.2 Referring to the Circular No.334/1/2007-TRU dated 28.02.2007 on classification of taxable service, learned Authorised Representative for the Revenue submits that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etc., on the schedule area and thereafter the entire schedule area of the First Party. Clause 4 : The extraction of minerals from sand mine shall be carried out by the Second Party by itself or through other agency in accordance with the established mining practice, in conformity with the mining laws, rules and regulations for the time being in force. Clause 5 : Upon execution of this agreement the First Party shall hand over possession of the said mines to the Second Party, shall be entitled to enter upon the schedule land and to carry out all necessary operations for implementing the terms contained herein and putting up crushing and screening plant of required capacity and temporary constructions and maintaining structures such as huts, buildings, workshops, store house and any other such structure which may be necessary for the Second Party to carry on the mining operations strictly in conformity with the laws applicable to thesubject matter. It is clearly understood between the parties that the right granted to the Second Party to enter upon the said mines is only to carry out the mining operations and other incidental operations connected therewith. Clause 7 : The Second Part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing all the statutory requirements under the relevant mining laws; (g) Be entitled to put up temporary structures like crushing and screening plant, electrical poles and overhead/underground cables, office, huts, sheds, store house or any other structures that may be necessary for carrying out mining operations and shall comply with all such requirements of law that govern erection of such structures As per the Mines and Regulations. Clause 21: The First Party hereby agrees to pay to the Second Party a sum of Rs. 188/- per metric ton to every ton of calibrated Iron Ore, Rs 25/- per MT of Iron Ore fines raised and generated as given in SCHEDULE D . It is agreed by and between the Parties that the Second Party shall raise/produce Calibrated Iron ore, BHO of 10-30 mm sizes and iron ore fines so generated thereon.... . It is agreed between the Parties that Second Party shall endeavour to optimize and maintain the production level for mutual benefit of both the Parties and to supply the iron ore/materials so extracted from Jambunathanahalli iron ore mines to the contracted Purchasers of the First party. 7. A plain reading of the stipulations in the agreement referred to above, it is cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65A of the Finance Act, 1994, the more specific description be preferred to the General description. Besides, we find that after introduction of the levy on mining operation, Circular No.334/1/2007-TRU has been issued by the Board on 28.02.2007 explaining the Mining of Mineral, Oil or Gas service at para 6.2 of the said Circular which reads as follows: 6.2 Mining Service [section 65(105)(zzzy)] : Presently, geological, geophysical or other prospecting, surface or sub-surface surveying or map-making services relating to location or exploration of deposits of mineral, oil or gas are leviable to service tax under survey and exploration of mineral service [section 65(105)(zzv)]. Services such as site formation and clearance, and excavation and earth moving, drilling wells for production/exploitation of hydrocarbons (development drilling) well testing and analysis services sub-contracted services such as deploying workers and machinery for extraction/breaking of rocks into stones, sieving, grading, etc. outsourced services, provided for mining are individually classified under the appropriate taxable service. Services provided in relation to mining of mineral, oil and gas are comprehe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pe of mining operations, hence, leviable to tax w.e.f. From 01.06.2007. 14. The reliance placed by the Ld. A.R. for the revenue on the judgement of the honourable Bombay High Court in CIT Vs Sesa Goa(I) Ltd. s case in support of his contention that extraction of Iron Ore is not a simple processing activity but results into production of iron ore, hence covered under the scope of BAS, will not be of much help. In the said case the Hon ble High Court was confronted with the issue under the income tax act where the question was whether the assessee is entitled for deduction on account of investment allowance when the assessee is engaged only in processing activity not in production and manufacture of any article or thing. Referring to the judgements of the Hon ble Supreme Court and various high Courts, the Hon ble High Court has held that the direction on account of investment allowance be admissible as it cannot be said that extraction of ore would not amount to production . We do not find such is the question raised in the present case. The issue involved in the present case is, whether the host of activities/service carried out by the appellant under the Raising agreement, result i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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