Case Law Details

Case Name : Reliance Michigan (JV) Vs CCE (CESTAT Mumbai)
Appeal Number : Application No. ST/ST-1797/09-Mum
Date of Judgement/Order : 08/04/2011
Related Assessment Year :
Courts : All CESTAT (716) CESTAT Mumbai (144)

The question whether ‘Mithi River’ is a river or not, is a pure question of fact which needs to be examined and settled at the final hearing stage of the appeal. For the present, we consider the fact that the activity undertaken by the appellant in the aforesaid stream of water was ‘dredging’. Their limited case is that the activity was undertaken in a drain and not in a river. WE note that even the agreement between the appellant and MMRDA describes the stream as ‘Mithi River’. It cannot be called otherwise merely by reason of the fact that rainwater or domestic sewage from the surrounding areas are also flowing into it or that industrial effluents are discharged into it. After all, even popular rivers in the country suffer from these problems. Prima facie, ‘Mithi River’ cannot be called otherwise for any of the reasons stated by the appellant or their counsel. We have also seen a map produced by the appellant which indicates that Vihar and Powai lakes overflows into this stream and the waters fall into Mahim bay of the Arabian sea. A stream of water connecting the large lakes and the sea can hardly be called a mere drain. As a matter of fact, the authentic records to show the status of this stream of water have to come from the Revenue District Authorities but the appellant has not produced any.

Prima facie, therefore, we consider ‘Mithi River’ to be a ‘river’ and the activities undertaken by the appellant herein to be dredging of river falling within the definition of this expression under section 65(36) of the Finance Act, 94. Consequently, prima facie, the appellant is liable to pay service tax.

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI

Application No. ST/ST-1797/09-Mum
APPEAL No. ST/262/09-Mum

Arising out of Order-in-Original no. 03/KLG/Th-II/2009 Dated: 13.08.2009
Passed by the Commissioner of Central Excise, Thane-II

Date of Decision: 08.04.2011

RELIANCE MICHIGAN (JV)

Vs

CCE, THANE II

Appellant Rep by: Mr. P.K.Sahu, Adv
Respondent Rep by: Mr. W.L.Hangshing, JCDR

CORAM: P G Chacko, Member(J)
Sahab Singh, Member(T)

 

ORDER NO. S/167/11/CSTB/C-I

Per: P.G.Chacko:

1. In this application, the appellant seeks waiver of pre-deposit and stay of recovery in respect of service tax amount of Rs.91.23.081/- and higher amount of penalties. The demand is under the head ‘dredging service’ and for the period from 5.5.2006 to 31.7.2007. During the said period, the appellant had undertaken dredging of ‘Mithi River’ under a contract entered into with Mumbai Municipal Regional Development Authority (MMRDA, for short). The tax was demanded on the total amount collected from MMRDA for the work of dredging done in ‘Mithi River’. The case of the appellant is that ‘Mithi River’ is not a river but only a ‘storm water drain’. It is submitted that dredging of a drain is not taxable under Chapter V of the Finance Act, 94 inasmuch as the definition of ‘dredging’ given under section 65(36a) of the Finance Act, 94 does not apparently include dredging of any body or stream of water other than river, port, harbor, backwater or estuary. The taxable service as defined under section 65(105)(zzzb) is any service provided or to be provided to any person by any other person in relation to dredging. The appellant has produced maps, sketches and photographs in their bid to show that ‘Mithi River’ is just a drain. The learned counsel for the appellant submits that navigation is not possible in that stream of water and that it is just a conduit for effluent waters to the sea. The counsel has also referred to a study report dated 10.7.2004 submitted to the Maharashtra Pollution Control Board, which contains results of ‘Mithi River’ water analysis and also contains finding to the effect that ‘Mithi River’ is formed due to overflows of Vihar and Powai lakes and that the cumulative discharge of sewage from the thickly populated area around the stream has converted the river into the biggest combined sewage of Mumbai. According to the learned counsel, ‘Mithi River’ is not a river in popular parlance in the modern times.

2. The learned JCDR, on the other hand, submits that the stream was always known as a river and that even the tender notice of MMRDA described at as a river. The appellant obtained the dredging work with reference to such tender notice and, therefore, cannot plead that they were not dredging river during the period of dispute.

3. The question whether ‘Mithi River’ is a river or not, is a pure question of fact which needs to be examined and settled at the final hearing stage of the appeal. For the present, we consider the fact that the activity undertaken by the appellant in the aforesaid stream of water was ‘dredging’. Their limited case is that the activity was undertaken in a drain and not in a river. WE note that even the agreement between the appellant and MMRDA describes the stream as ‘Mithi River’. It cannot be called otherwise merely by reason of the fact that rainwater or domestic sewage from the surrounding areas are also flowing into it or that industrial effluents are discharged into it. After all, even popular rivers in the country suffer from these problems. Prima facie, ‘Mithi River’ cannot be called otherwise for any of the reasons stated by the appellant or their counsel. We have also seen a map produced by the appellant which indicates that Vihar and Powai lakes overflows into this stream and the waters fall into Mahim bay of the Arabian sea. A stream of water connecting the large lakes and the sea can hardly be called a mere drain. As a matter of fact, the authentic records to show the status of this stream of water have to come from the Revenue District Authorities but the appellant has not produced any.

4. Prima facie, therefore, we consider ‘Mithi River’ to be a ‘river’ and the activities undertaken by the appellant herein to be dredging of river falling within the definition of this expression under section 65(36) of the Finance Act, 94. Consequently, prima facie, the appellant is liable to pay service tax.

5. The learned counsel has pointed out that, though the same activity was continued beyond 31.3.2007 and consideration for the service was collected from MMRDA, no demand was raised by the department. It is also submitted that a sister-concern of the appellant-company has also been undertaking the same activity in the same ‘Mithi River’ but there is no demand of service tax on them. Considering these submissions, we are refraining from asking for full deposit of the tax amount. In the facts and circumstances already discussed, we direct the appellant to pre- deposit an amount of Rs.10,00,000/- (Rupees Ten lakhs only) within a period of four weeks and report compliance on 6.6.2011.

(Dictated in Court.)

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