Rashleela Enterprises Pvt Ltd Vs Commissioner (CESTAT Delhi)
CESTAT Delhi held that services such as handling and transportation of mineral from pithead to specific locations would be a post-mining activity and would be taxable under ‘cargo handling service’ or ‘GTA service’ and not under ‘mining services’.
Facts- M/s. Rashleela Enterprises Pvt. Ltd. has filed this appeal to assail the order dated 01.02.2017 passed by the Commissioner. The Commissioner has held that the activities undertaken by the appellant in respect of the material/goods mentioned in the agreement would be leviable to service tax under ‘mining of minerals, oil or gas service’ under section 65(105)(zzzy) of the Finance Act, 1994.
Notably, the appellant is engaged in the provision of services of mining, transportation of the mined goods from mining sites to other places and transportation of other goods to various principals/ mine owners.
Conclusion- A perusal of the contracts leaves no manner of doubt that the appellant had undertaken the activity of mining and transportation separately, for which separate charges were paid to the appellant by separate invoices. Thus, when the contracts categorise the activity of mining and transportation as two separate activates having no nexus with each other, then these two activities have to be treated as two separate services.
Circular dated 12.11.2007 issued by the Central Board of Indirect Taxes and Customs after the introduction of ‘mining service’ under the Finance Act, w.e.f. 01.06.2007. The said Circular clarifies that services such as handling and transportation of mineral from pithead to specific locations would be a post-mining activity and would be taxable under ‘cargo handling service’ or ‘GTA service’ as the case may be.
FULL TEXT OF THE CESTAT DELHI ORDER
M/s. Rashleela Enterprises Pvt. Ltd.1 has filed this appeal to assail the order dated 01.02.2017 passed by the Commissioner, Central Excise Commissionerate, Alwar2. The Commissioner has held that the activities undertaken by the appellant in respect of the material/goods mentioned in the agreement would be leviable to service tax under „mining of minerals, oil or gas‟ service under section 65(105)(zzzy) of the Finance Act, 19943.
2. The issue involved in this appeal is about demand of service tax on the activity of transportation of limestone and reject undertaken by the appellant under the category of mining service and the period involved is from July 2013 to December 2014.
3. The appellant is engaged in the provision of services of mining, transportation of the mined goods from mining sites to other places and transportation of other goods to various principals/ mine owners. In this regard, the appellant entered into contracts with various principals for the provision of the requisite services by it. According to the appellant, in each of these contracts executed between the appellant and the principals, separate rates have been mentioned for the services of mining and for the services of transportation and the appellant has charged as per the services availed by the principals. The appellant contends that mining work was carried out independently by the principals as well as by the appellant or sometimes by both. Further, the goods mined by the principals have been transported by the appellant and vice-versa. The appellant provided services as desired by the principals and charged for the same accordingly. With respect to the provision of mining services, the appellant acted as a contractor for carrying out the activities of overburden removal, mining the ore from the bottom of mine, cutting the rocks by drilling/blasting and raising of ore and the appellant charged for such services as per the rates given under the respective contracts. The appellant also charged separate amount for the services rendered towards transportation of mined material to respective plants, crushers or other designated places and transportation of reject stones to dump sites at a place distant from the mines. To substantiate this plea, the appellant placed reliance on the invoices raised by the appellant for the services provided by it. The appellant further contends the mining activity provided by the appellant ceased as soon as the mineral was excavated. Thereafter „transit slips‟ were prepared by the appellant and the goods were transported to plants, crushers or other designated places, located at a place distant from the mines. This activity of transportation, according to the appellant took place on public road and specific mention of the vehicle number and weight has also been mentioned in the transit slip issued by the appellant.
4. With effect from 01.06.2007 (i.e. after the introduction of service of „mining of minerals, oil or gas‟ under the ambit of service tax), the appellant obtained service tax registration and started paying the applicable service tax on the invoices raised for the services of mining provided by it. There is no dispute on this aspect in the present appeal. Regular audits of the records of the appellant were conducted and no dispute was ever raised by the department in this regard.
5. However, with respect to the transportation activity undertaken by the appellant, the appellant contends that the same was in the nature of service of „goods transport agency‟4 and service tax was liable to be discharged by the service recipients i.e. principals and it was duly discharged by the principals.
6. An audit of the appellant was conducted. This culminated into issuance of the show cause notice dated 13.10.2014 demanding service tax of Rs. 7,54,48,175/- for the period April 2009 to June 2013 on the transportation activity carried out by the appellant under the category of „mining services‟. This show cause notice issued to the appellant was adjudicated by order dated 30.6.2015 and the entire demand was confirmed. The appellant filed an appeal against the said order before the Tribunal, which appeal was allowed, and the order dated 30.6.2015 was set aside. The said decision is Rashleela Enterprises Pvt. Ltd. CCE, Jaipur-I5.
7. The present show cause notice dated 17.04.2015 has been issued for the subsequent period from July 2013 to December 2014, proposing a demand of Rs. 4,61,51,720/- with interest and penalty. The appellant filed a detailed reply to the show cause notice denying the allegation. The Commissioner, by order dated 01.02.2017, confirmed the entire demand of Rs. 4,61,51,720/- with interest and penalty. It is this order that has been assailed in this appeal.
8. For the purpose of present appeal, the following six contracts entered by the appellant are in dispute:
