2025-VIL-1023-CESTAT-HYD-ST
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SERVICE TAX CESTAT Cases

Service Tax – Sections 66B and 73A of Finance Act, 1994 – Service tax demand on extraction of baryte ore – Whether Appellant is liable to pay Service Tax on amount received towards extraction of baryte ore – HELD – Appellants are required to undertake total work right from the beginning of excavation and removal of overburden to the extraction of barytes ore and its further sizing, screening and transportation. What was covered under the mining services prior to negative list regime may or may not be liable to service tax under negative list regime depending on whether the said activity is covered in the negative list or otherwise – The Section 66B of the Act provides for levy of service tax on all services other than those services specified in negative list – Extraction of baryte ore from mines is an activity, which would amount to production of baryte ore, hence, it would be covered in negative list and therefore, not liable to service tax in terms of Section 66B of the Act – Impugned order confirming demand to this extent is not sustainable and set aside - The appeal filed by the appellant is allowed except to the extent of computation of demand on denial of ineligible credit on input/input service due to non-production of eligible documents – The appeal is disposed of - Transportation activity – Demand of tax – Whether demand confirmed by adjudicating authority on transportation activity is sustainable – HELD – Appellant has not contested this issue on merit, however, they have only taken ground of revenue neutrality that had paid this tax and they would have been eligible to take credit and therefore, demand is not sustainable – Appellant have also contested rate of service tax applied – There is some merit in Appellant’s contention that there have been certain errors in calculating amount of service tax – Demand upheld by adjudicating authority is correct, except to extent of wrong application of rate of service tax prevailing during relevant period, which needs to be cross-checked – Confirmed demand can be reduced to that extent of mistaken calculation on account of wrong rate of service tax applied and thereafter, remaining amount shall be payable by Appellant – For this limited purpose, matter remanded back to adjudicating authority to re-determine amount of service tax payable - Free supply of diesel – Dropping of demand – Whether free supply of diesel can be considered as additional consideration for including same in gross value – HELD – When proposition was made in show cause notice that demand could have been raised in terms of Section 73A of the Act, Revenue was not very sure as to either any service tax has been collected or even leviable on said free supply of diesel – There is no evidence that Appellant have collected any excess amount or any service tax in respect of free supply of diesel – Free supply of diesel cannot be considered as additional consideration for including same in gross value – Department’s appeal to extent of non-inclusion of free supply of diesel is not correct – Impugned order dropping demand to this extent is sustainable - Whether adjudicating authority is justified in dropping demand raised on Appellant for availing Cenvat credit on MS angles, sheets, squares etc. used for repairs of tippers and dumpers – HELD – In show cause notice, only ground taken for denial of said credit in respect of certain inputs was that said inputs were falling under Chapter 72 and therefore, cannot be treated as capital goods – Adjudicating authority has considered various submissions and was satisfied that said goods can be considered as components, spares, etc. of capital goods and since dumpers and tippers were capital goods, goods were eligible for credit – Conclusion drawn by adjudicating authority is correct.
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