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TMI Blog2024 (7) TMI 928X X X X Extracts X X X X X X X X Extracts X X X X ..... ormation and Clearance Service, Excavation and Earth Moving, Demolition Services, has not registered with the Service Tax Commissionerate for payment of service tax on the amounts received for rendering such services, Investigations were conducted. 3. It was noted that M/s.UPL Environmental Engineers Ltd. (M/s.UPL, for short) who are leading environmental construction and Project Management Company had executed an agreement with Coimbatore Municipal Corporation for Integrated Waste Management. M/s.UPL, in turn, appointed the assessee as sub-contractor for carrying out the work orders in respect of such agreements executed with the Coimbatore Municipal Corporation (CMC, for short). The assessee furnished copies of orders given by CMC during the period from November 2007 to February 2008. On perusal of the work orders, it was revealed that the assessee had been given the work of site clearance and excavation at Vellalore compost yard for which the CMC had engaged excavators, bull dozers etc. provided by the assessee. Besides this, the assessee also did the work of site clearance, levelling, earth moving and excavation. The time given for each work order for completion of the work of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the different work orders, the Department was of the view that the activity rendered by the assessee would fall under the definition of "Site Formation Clearance, Excavation and Earth Moving Services" as defined under Section 65 (97a) of the Finance Act, 1994. As per Section 65 (105) (zzza) of the Finance Act, 1994 the taxable service means 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. In consequence to the investigations, the department issued show cause notice dt. 27.08.2012 to the assessee alleging that the assessee has provided the Site Formation, Clearance, Excavation and Earth Moving and Demolition Services to the CMC and M/s.UPL and proposing to demand the service tax along with interest and for imposing penalties. After due process of law, the original authority vide order impugned herein dropped the proceedings in respect of certain work orders. However, in respect of two work orders dated 13.02.2009 and 24.03.2009, which were services of jungle clearance and site clearance, excavation etc., the original authority held that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, 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." ( emphasis supplied ) 8.3 'Site Formation' is also mentioned in paragraph 6 of the Budget Letter dated 27 July, 2005 and relevant portion is reproduced below :- "6. Site formation and clearance, excavation, earth moving and demolition services 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 (zzza) of Section 65(105) of the Finance Act, 1994. "Site formation and clearance, excavation and earthmoving and demolition" has been defined in clause (97a) of Section 65 of the Finance Act, 1994. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the exclusion clause and therefore any demand under SFCE is not sustainable in law. 8.7 It is worthwhile to note that Notification No.17/2005 exempts this service provided in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other ports. 8.8 A plain reading of the definition of SFCE, Board's circular dated 27.7.2005 and the above notification would help in understanding the scope of this service and legislative intent behind including certain areas and excluding some from the taxation. The service SFCE, on the face of it, aims to recover, or work on a site for exploitation of the vacant ground so recovered or of the resources beneath the earth, like construction of building/factories any civil structure. The aim is to recover or prepare, or work on a site to make it ready for some revenue yielding exploitation. However, the Government has thought it fit to exclude from its scope similar services when made in relation to construction of roads, airports, railways, transport terminals, dams, ports etc. Thus, the Government has intended to keep out activities which are in the nature of infrastructure and public util ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... merta Technologies Ltd. Vs CCE - (2023) 8 Centax 183 (T) which has been maintained by the Hon'ble Supreme Court in CCE Vs Rosmerta Technologies Ltd. - (2023) 8 Centax 184 (SC). Further the decision of the Tribunal in the case of CCE Vs Awasti Traders - 2017 (3) GSTL 438 (T) lends support to the above view. 8.14 Without prejudice to the above contention that the activity undertaken by the assessee is not liable to be taxed, a perusal of the purchase orders would show that there was supply of material and labour by the assessee. Even assuming without admitting that it would amount to service then also it would be covered under Works Contract Service and not under Site Formation and Clearance, Excavation and Earthmoving and Demolition services and therefore classification adopted in the show cause notice is incorrect. Hence the entire demand is not sustainable. Once the demand is not sustainable, the penalties imposed are also not correct. 8.15 Without prejudice to the above submission, the issue involved is one of interpretation and therefore does not call for invoking larger period of limitation. The appellant has done a meritorious job in alleviating the problems faced by the loc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service covered in the above work orders were related to management of solid waste for CMC and no site formation and clearance, excavation and earthmoving work was involved in the above work orders; that there is no evidence to prove that the service rendered in the above 8 work orders were site formation and clearance, excavation and earthmoving and demolition service. Without evidence on record, it could not be concluded that the above services rendered to CMC in respect of the above 8 work orders were Site Formation and Clearance, Excavation and Earthmoving and Demolition service. (b) the 7 work orders given by M/s.UPL involve waste reformation which is to be carried out by assessee. The activities involved were cutting, shifting, transporting, dumping, filling, dozing, compacting, reformation, complete and levelling of Municipal Solid Waste using required machineries, gravel filling, earth work embankment, mixing of bentonite and providing and spreading of soil liner system, providing & supplying of liner system, providing & supplying and laying of C&D materials, MSW layer 200 mm C&D, 600 mm clay layer, 150mm C&D, providing and supplying and laying 300 mm soil above 200 gsm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in respect of two work orders of M/s.UPL involving jungle clearance and jungle cutting at the site. If such activities fall under Site Formation Clearance, the other work orders being part of these two work orders ought to fall under 'Site Formation Services'. 10.7 The perusal of 8 work orders give by the Coimbatore Municipal Corporation would show that the work involves excavating, levelling, dumping, filling, dozing, compacting etc. which are all related to SFCE. The definition of "SFCE" is wide enough to include all the activities carried out by the assessee as per the work orders. The services rendered by the assessee cannot be classified as 'Solid Waste Management Services' as it satisfies the ingredients under Site Formation Service. 10.8 The argument put forward by the ld. Counsel that as these are services provided to municipal corporation in relation to waste management, these are nothing but part of statutory sovereign function discharged to the public and therefore is not subject to levy of service tax, was countered by the Ld. A.R by submitting that such services do not fall under the sovereign function as the work orders have been given by the CMC to M/s.UPL who have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rders of M/s.UPL carried out by the appellant in detail. The scope of the 8 work orders of CMC has already been reproduced in the table in para 3 above. From the nature of works undertaken itself it is clear that the works are excavation of garbage mounds at the above dump yard, dozing, levelling of excavated garbage, engaging truck type hydraulic excavator for the work of excavation of garbage mounds, engaging crawler type bull dozer for the work of debris and levelling of excavated garbage, engaging earth moving machinery front end loader for transferring daily collection of debris from Ukkadam sewage to Vellalore yard. From the very nature of the work order itself it is clear that though the words 'excavating', 'earthmoving' are used in the work order, the nature and character of the works executed are management of waste and not site formation for the purposes of construction of a building, factory or civil structure. The proposal and object of carrying out the work orders is solely for management of waste and not for preparation of the land for construction or such other purposes. 15. The scope of the site formation and clearance services has been explained by the Board vide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cover with liner soil. The base ground was covered with prescribed soil to act as an impervious liner to stop garbage leachate contaminating the ground water and there were frequent inspections conducted by officials to oversee the works carried out. 15.4 The yard was compacted with grass which was spread on the water for safe base. There were works carried out for transporting soil through the narrow road of the village. Earlier, the Municipal Corporation used to bury the garbage by digging pits in the ground which led to contamination of water and due to the protest of the people, the clearance of garbage work was taken up by the Municipal Corporation to manage the waste. The land was reformed from all sides by compacting with rollers to give stability to the top structure. A slope was formed and drainage liner is laid over the garbage which is compacted. This drainage liner is to circulate gases formed inside the garbage and collect it through perforated pipes fitted in intervals throughout the structure. Over this drainage liner, 600 mm clay soil is laid and compacted. This creates impermeability to prevent rain water from seeping within the compacted structure so as to minim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not classifiable under 'Site Formation and Clearance, Excavation and Earthmoving and Demolition Services'. 18. It is also argued by the ld. counsel for the assessee that the purpose of the project was to convert the entire municipal waste into agricultural manure. In para 4 of the concession agreement dt. 19.11.2007 entered into between CMC and M/s,UPL under the heading 'Production of compost' the detailed process of production of compost waste from municipal solid waste has been mentioned. It is submitted by the learned counsel that after passing of several years, now, the municipal corporation has been able to convert the municipal waste as compost by adopting various processes and is being used in agriculture as manure. 19. The definition of "Site Formation and Clearance, Excavation, Earthmoving and Demolition Services", excludes the services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovation or restoring of water resources or water bodies. In fact, the entire effort on the part of CMC by engaging M/s.UPL is to manage the waste and also to protect the watersheds / water bodies. The original authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment and therefore would fall under Site Formation and Clearance Services. The Circular No.123/5/2010-TRU dt.24.4.2010 has also been referred by the Ld. Counsel. In para 36.3 of the impugned order the said circular which clarified that Site Formation and Clearance services is attracted only if the service providers provide the services independently and not as a part of complete work. The original authority held that these two work orders are for jungle clearance, dressing, levelling, excavation, earth filling, providing and laying drainage layer, providing and spreading of soil liner system, providing and fixing RCC pre cast slab, and backfilling by excavated earth and brick pitching etc. It is observed that these works are done independently and not as part and parcel of the waste management system. Ld. Counsel has submitted that these works of jungle clearance, levelling, excavation, earth filling, providing and fixing RCC pre cast slab, trenches for laying the pipes etc. are done as part and parcel of the waste management system to protect the water tables / water bodies. Without clearing of the bushes and vegetation and laying the precast slab for pipes, drainage etc., the app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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