By TIOL News Service

MUMBAI, DEC 08, 2016: THE AA confirmed the Service Tax demand of Rs.55,89,035/- by classifying the activity undertaken by the appellant under the category of "Site formation and clearance, excavation and earthmoving and demolition" service.

Before the CESTAT, the appellant inter alia submitted that the activities carried out are not in the nature of Site formation services but in the nature of transportation service. Inasmuch as M/s Western Coalfields had provided work order to one M/s Navjivan Earthmovers Pvt. Ltd (NEPL) of loading, unloading and transportation of coal at Open Cast mines; that in turn, part of work related only to transportation of overburden material was sub contracted to Appellant by M/s Navjivan; that the transportation activity undertaken by them is thus not liable to service tax as the same is not "Site Formation and Clearance, Excavation and Earthmoving and Demolition Service". Furthermore, being an individual service provider and not a transport agency they are not liable to service tax and even if they are considered as transport agency then too the liability shall rest with service recipient M/s NEPL;that M/s. NEPL have deposited the service tax under reverse charge mechanism.

The AR relied upon the decision in Avtar & Company - 2014-TIOL-287-CESTAT-MUM in support of the impugned order.

The Bench observed -

+ M/s NEPL was awarded work contract by M/s Western Coalfields. M/s NEP in turn has awarded contract to the Appellant for transportation of Material (Removal of old dumped material in extension embankment against Ambey river & B. C. Soil).

+ The agreement between M/s NEPL and Appellant fixes the rate as per the load transported and distance in Kms. The Appellant is liable only to provide Volvo Tippers and the job of Loading & Dozing has to be carried out by M/s NEPL only.

+ The agreement also says that the service tax liability will be of M/s NEPL and that the transportation work has to be done as per the instructions of M/s NEPL. Further bills raised by the Appellant are also towards transportation of OB/ waste rock and shale material from mine.

+ Whatever may be the activity of the work contractor M/s NEPL, it is the nature of services of the Appellant which has to be looked into for imposition of service tax. On overall perusal of the SCN and the impugned order we find that nowhere the activity of the Appellant and its agreement with M/s NEPL was considered.

+ Since in this case the Appellant has undertaken only the transportation activity and the services were rendered to M/s NEPL which is a private Ltd. concern, we hold that the services are of transportation on which the Appellant is not liable to service tax being taxable under reverse charge mechanism. Thus the Appellant is not liable to any service tax under the category of "Site formation and clearance, excavation and earthmoving and demolition" services.

The impugned order was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-3178-CESTAT-MUM)