Case Law Details
Vyshnavi Minerals Vs Commissioner of Central Excise (CESTAT Bangalore)
The Bangalore Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) considered an appeal filed by M/s. Vyshnavi Minerals against an order confirming service tax demand for the period from 01.04.2005 to 30.09.2006. The appellant was engaged in activities such as excavation, extraction, grading, sorting, and related operations in respect of iron ore for its customer, M/s. S.B. Minerals, Hospet.
The Revenue sought to levy service tax by classifying these activities as “Business Auxiliary Services” (BAS) under Section 65(19)(v) of the Finance Act, 1994, on the ground that the appellant was engaged in production or processing of goods for, or on behalf of, its client. A show-cause notice dated 15.10.2007 was issued, and the Commissioner confirmed the demand through the impugned order.
The appellant contended that the activities undertaken by it were in the nature of mining services and could not be classified as Business Auxiliary Services. It was argued that “Mining Services” were specifically introduced as a taxable service under Section 65(105)(zzzy) of the Finance Act, 1994 only with effect from 01.06.2007. Since the disputed period was prior to the introduction of the taxable category of mining services, no service tax liability could arise. The appellant relied on judicial precedents, including Indian National Shipowners’ Association v. Union of India and recent CESTAT decisions in Popular Constructions and Snehalatha Singh.
The Revenue relied on a CBEC Circular dated 12.11.2007 and argued that certain services provided to the mining sector may fall under other taxable service categories such as cargo handling or site formation services rather than mining services.
After hearing both sides, the Tribunal noted that there was no dispute regarding the nature of the appellant’s activities, namely excavation, extraction, grading, and sorting of iron ore. It observed that these activities were recognized as Mining Services with effect from 01.06.2007. Since the period under dispute was prior to that date, the Tribunal rejected the Commissioner’s view that the services should be classified as Business Auxiliary Services.
Relying on its earlier decisions in Popular Constructions and Snehalatha Singh, the Tribunal held that the services rendered by the appellant were rightly classifiable as Mining Services. Accordingly, the impugned order was set aside, and the appeal was allowed with consequential relief in accordance with law.
FULL TEXT OF THE CESTAT BANGALORE ORDER
Briefly the facts are that the appellant M/s. Vyshnavi Minerals are into services such as excavation, extraction, grading, sorting etc., of iron ore to their customer M/s. S.B. Minerals, Hospet. The Revenue considering the above services as Business Auxiliary Services (BAS) demanded service tax by issuing show-cause notice dated 15.10.2007. The Commissioner in the impugned order confirmed the demand for the period from 01.04.2005 to 30.09.2006. Aggrieved by this order, the appellant is in appeal before us.
2. The Learned Counsel submits that the confirmation of demand of service tax is on the ground that the Mining Services rendered by them are in the nature of production or processing of goods for, or on behalf of, the client as defined under Clause (v) of Section 65(19) of the definition of ‘Business Auxiliary Services’. It is his submission that the services undertaken by them cannot be classified under Business Auxiliary Services, since they are undisputedly Mining Services. He further submits that Mining Services as a service was introduced vide Section 65(105)(zzzy) of the Finance Act, 1994 only w.e.f. 01.06.2007. Since, the period of dispute, in the present case, is prior to 01.06.2007; the question of demand of service tax does not arise. Relies on the following decisions:
- Indian National Shipowners’ Association vs. Union of India: 2009 (14) STR 289 (Bom.)
- M/s. Popular Constructions vs. The Commissioner of Central Excise vide Final Order No. 20469/2025 dated 19.03.2025
- Snehalatha Singh Vs. Commissioner of Service Tax, Belgaum vide Final Order No. 21997/2025 dated 10.12.2025
3. The learned Authorised Representative (AR) reiterating the findings of the Commissioner submits that as per Circular F.No. 232/2/2006-Cx.4 dated 12.11.2007 submits that some of the services provided to mining sector may not fall under Mining Services but are to be categorised under other services such as cargo handling services, site formation services, etc.
4. Heard both sides. There is no dispute that the appellant is into providing services such as excavation, extraction, grading, sorting etc., and these services were classified as Mining Services w.e.f. 01.06.2007. In the instant case, the disputed period being prior to 01.06.2007, we do not accept the observations of the Commissioner that these services are to be classified as ‘Business Auxiliary Services’. In a similar set of facts considering various decisions on record, we have held that the services rendered by the appellant were rightly classifiable as Mining Services in the case of M/s. Popular Constructions (supra) and in the case of M/s. Snehalatha Singh (supra). Following the ratio of the above decisions, the impugned order is set aside and the Appeal is allowed with consequential relief, if any, as per law.
(Operative portion of the order was pronounced in Open Court on conclusion of hearing.)
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