Activity Of Collection, Cleaning, Segregation And Stacking Of Blasted Raw Magnesite Is Classifiable As ‘Mining Services’: CESTAT
Mariya Paliwala
15 Sept 2023 9:45 PM IST
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the activity of collection, cleaning, segregation, and stacking of blasted raw magnesite is classifiable under the category ‘Mining Services’.The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that the activities of collection, cleaning, segregation,...
The Chennai Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that the activity of collection, cleaning, segregation, and stacking of blasted raw magnesite is classifiable under the category ‘Mining Services’.
The bench of P. Dinesha (Judicial Member) and M. Ajit Kumar (Technical Member) has observed that the activities of collection, cleaning, segregation, and stacking of blasted raw magnesite are provided in relation to mining. The activities undertaken by the appellant are a part of the mining operations and are more appropriately classified as a ‘mining service." Mining activity has been made taxable by legislation with effect from 1.6.2007 only. Prior to this date, such activities, being part of mining operations, were not subjected to service tax.
The appellant/assessee, who is registered with the Service Tax Department, carried out the work of collection, cleaning, segregation, and stacking of blasted raw magnesite within the mining area for M/s. Burn Standard Co. Ltd. The assessee has entered into an agreement or contract.
During the period from 10.6.2006 to 11.6.2007, it was noticed by the Central Excise officers that they had received a sum of Rs. 15,22,166 as a consideration but had not paid any service tax, not filed ST-3 returns, and not followed the relevant provisions of the FA.
A Show Cause Notice was issued seeking to classify the activity under ‘Business Auxiliary Service’ and demanding a service tax of Rs. 1,86,514 with interest and also proposing to impose penalties.
After due process of law, the original authority confirmed the demand for service tax with interest and also imposed a penalty of Rs. 3,73,028 under Section 78 and Rs. 5,000 under Section 77.
The appellant preferred an appeal before the Commissioner of Central Excise (Appeals), who rejected the appeal filed by the appellant and upheld the adjudication order.
The issue raised was whether the service of "segregation of magnesite" is classifiable under ‘business auxiliary service’ under Section 65(105)(zzb) of the Finance Act, 1994, or under ‘mining service’ classifiable under Section 65(105)(zzzy) of the Finance Act, 1994.
The tribunal held that prior to 1.6.2007, the activities, being part of mining operations, were not subjected to service tax. The period of demand was from 10.6.2006 to 11.6.2007; therefore, no service tax was levied on activities for a major part of the period.
"We order that duty and interest may be worked out accordingly. Since duty was payable only as of June 1, 2007, late fees and penalties are set aside," the tribunal said.
Case Title: M/s. KRSS Manpower Service Versus Commissioner of GST & Central Excise
Case No.: Service Tax Appeal No.40811 of 2014
Date: 12.09.2023
Counsel For Appellant: Nivedita Mehta
Counsel For Respondent: N. Satyanarayanan
