By TIOL News Service

MUMBAI, MAY 03, 2017: ON investigation, it was noticed that the appellant though registered under "Site Formation and Clearance, Excavation and Earthmoving and Demolition Services" had not discharged service tax as applicable on the gross amount collected by them from their client.

The Appellant contested the SCN [period 17.04.2010 to 31.01.2007 and 01.02.2007 to 31.03.07] and submitted that the nature of work undertaken by them was in respect of drilling, boring and core extraction services which will be a mining activity as per the definition of ‘Mining Operation' introduced in the Budget of 2007; that the demand is hit by limitation.

The demands were confirmed and appeals came to be filed before the CESTAT.

The Bench observed that the appellant has entered into an agreement with M/s Manganese Ore India ltd., Nagpur (MOIL) for executing the work of laying of haulage road, cross-cut, or winze.

Adverting to the definition of "Site formation and clearance, excavation and earthmoving and demolition services", the CESTAT further observed -

+ It can be seen from the above reproduced definition that all the activities undertaken by appellant mentioned herein above are covered by the said services. It is also to be mentioned here that appellant themselves were aware and were informed by their client MOIL that they have to take service tax registration and appellant did obtain the service tax registration on 04.01.2006 under the very same category of "site formation and clearance, excavation and earthmoving and demolition services". Despite being informed and instructed by their client and having taken the registration certificate, appellant did not pay the service tax liability to the Government of India. In our considered view this action of the appellant is totally unacceptable.

+ Secondly, we find that the claim of the appellant that their activity to fall under the "mining services" is also not correct as the Board Circular dated 27.07.2005 specifically states that such services as rendered by appellant would fall under the category of "site formation and clearance, excavation, earth moving and demolition services".

Concluding that both the impugned orders are correct and legal and do not require any interference, the appeals were rejected.

(See 2017-TIOL-1482-CESTAT-MUM)