Commissioner of CGST & Central Excise Vs Dholu Construction & Projects Ltd. (CESTAT Delhi)
Composite Mining Contracts Cannot Be Vivisected for Retrospective Service Tax; Site Formation Tax Not Applicable Because Essential Character of Contract Was Mining Activity; Revenue Cannot Reclassify Mining Operations as Site Formation to Tax Pre-2007 Activities: CESTAT; Introduction of Separate Mining Service Entry Shows Earlier Tax Entries Did Not Cover Mining: CESTAT.
The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Delhi dismissed the Revenue’s appeal against the Order-in-Original dated 24.08.2020, which had dropped service tax demand for the period 16.05.2005 to 31.05.2007 on activities relating to overburden removal, excavation, and truck loading of lignite undertaken by the respondent for Rajasthan State Mines and Minerals Ltd.
The Department alleged that the respondent’s activities were taxable under “Site Formation and Clearance, Excavation and Earthmoving and Demolition Services” under Section 65(97a) of the Finance Act. A show cause notice dated 30.09.2010 proposed recovery of Rs. 2.84 crore along with interest and penalties. The respondent contended that the activities formed part of integrated mining operations and were correctly classifiable as “Mining Services”, which became taxable only from 01.06.2007. The respondent had accordingly obtained service tax registration under “Mining Services” from 25.06.2007 after the introduction of Section 65(105)(zzzy).
