Site Formation and Clearance, Excavation and Earthmoving and Demolition Services [Sec 65(105)(zzza)] |
Effective upto 30th June, 2012 |
<A-B> <C-D> <E-H> <I-M> <N-R> <S-S> <T-Z>
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Landmark Service Tax Judgment - Site Formation and Clearance, Excavation and Earthmoving and Demolition Services
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Introduced With Effect From 16th June 2005 |
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Accounting Code |
Service Tax |
00440306 |
Interest |
00440307 |
Penalty |
00441431 |
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DEFINITION: |
According to Section 65 (105) (zzza), any service provided or to be provided to any person, by any other person, in relation to site formation and clearance, excavation and earthmoving and demolition and such other similar activities; will be a ‘taxable service’.
According to Section 65 (97a), “site formation and clearance, excavation and earthmoving and demolition” includes, -
(i) drilling, boring and core extraction services for construction, geophysical, geological or similar purposes; or
(ii) soil stabilization; or
(iii) horizontal drilling for the passage of cables or drain pipes; or
(iv) land reclamation work; or
(v) contaminated top soil stripping work; or
(vi) demolition and wrecking of building, structure or road,
but does not include such services provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies.
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SCOPE: |
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The definition of site formation and clearance, excavation and earthmoving and demolition is an inclusive definition and the activities specifically mentioned are indicative and not exhaustive. Prior to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes, preparation services of site formation and clearance, excavation and earthmoving or levelling are normally undertaken for a consideration to make the land suitable for such activities. Such services include blasting and rock removal work, clearance of undergrowth, drilling and boring, overburden removal and other development and preparation services of mineral properties and sites, and other similar excavating and earthmoving services. Demolition of structures, buildings, streets or highways is also undertaken for a consideration as a preparatory activity for subsequent construction activity or for clearing the site for any other purpose. All such activities fall within the scope of this service.
However, site formation and clearance, excavation and earthmoving and demolition services when provided in relation to agriculture, irrigation, watershed development and drilling, digging, repairing, renovating or restoring of water sources or water bodies are specifically excluded and not within the scope of this service.
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SERVICE TAX EXEMPTIONS: |
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(a) Small service providers whose aggregate value of taxable services rendered in the previous year has not exceeded the limit of Rs. 10,00,000/- (Service Tax Notification No. 8/2008-ST dated 01.03.2008)
(b) Services provided to the United Nations or International Organisations
(c) Services provided to Special Economic Zones (SEZ) units (including unit under construction) and SEZ developers
(d) Services which are exported as per ‘Export of Services’ Rules
(e) Services provided for official or personal use of foreign diplomatic missions and family members of diplomatic missions.
(f) Services provided by Reserve Bank of India
(g) Out of total value of service provided proportionate value of goods and material provided by the Service Provider
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SERVICE SPECIFIC EXEMPTION: |
Services of site formation and clearance, excavation and earthmoving and demolition and such other similar activities, provided to any person by any other person in the course of construction of roads, airports, railways, transport terminals, bridges, tunnels, dams, ports or other ports are exempt from Service Tax.
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RELEVANT SERVICE TAX NOTIFICATIONS: |
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Service Tax Notification No. 17/2005-S.T., dated 07-06-2005 Exemption Notification |
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RELEVANT SERVICE TAX CIRCULARS/INSTRUCTIONS/TRADE NOTICES: |
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Service Tax CBEC Circular No 123/5/2010 - TRU, dated 24-05-2010 Clarification regarding applicability of service tax on laying of cables under or alongside roads and similar activities. |
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Service Tax CBEC Instruction Letter File No. 334/1/2007- TRU, dated 28-02-2007 Explanation regarding changes brought by the Finance Bill, 2007 including mining services |
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Service Tax CBEC Instruction Letter File No. B1/6/2005-TRU dated 27-07-2005 |
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Case Laws Related |
STO 2014 CESTAT 50
Service Tax: Service of site formation and clearance, excavation and earth moving and demolition during 16/06/2005 to 31/03/2006: Demand: Interest under Section 75 and penalty under Section 76: Scope and liability: There is an apparent error in the concluding portion of the adjudication order which records the remittance apparently made and which has been appropriated, towards the tax liability assessed. Prima facie case is not in favour of the petitioner on the liability to penalty under Section 76. It is now the settled legal position that liability to penalty under Section 76 is not conditional upon existence of mens rea. Penalty payable(Para 6,7).
Pre-deposit of penalty ordered.
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STO 2014 CESTAT 20
Service Tax: Site formation and clearance services to South Eastern Coal fields: Scope and liability: The issue stand decided against appellants in the case of National Mining Co. Ltd. Vs. CCE, Dibrugarh reported in STO 2007 CESTAT 1393 however, in the very said decision, the Tribunal has observed that keeping in view the disputed nature of services and interpretation of the scope of the service, it is a fit case to waive the penalty under Section 80 of the Finance Act, 1994. Penalties waived.(Para 2).
Appeal disposed off.
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STO 2013 CESTAT 1126
Site Formation and Clearance, Excavation and Earth Moving and Demolition Service: there is no contract for mining of coal. Rather the contracts are for site formation: Case laws relied upon by appellants not applicable: Appeal rejected.
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STO 2013 CESTAT 792
Site formation and clearance, excavation and earthmoving and demolition: Whether the value of diesel supplied by the service recipient JSPL, free of cost, to the assessee service provider ought to be included in the gross value: Value of diesel supplied free of cost by the service recipient to the assessee service provider for providing the taxable "site formation and clearance, excavation and earthmoving and demolition" service would not be a component of the gross value.
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STO 2013 CESTAT 822
Site formation and clearance, excavation and earthmoving and demolition service: value of diesel and explosives supplied free of cost by the service recipient: Prima facie issue in favor of the appellants: Stay granted.
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STO 2013 CESTAT 430
Site Formation and Clearance, Excavation and Earthmoving and Demolition: Demand: Stay: Activities carried out at Sabarmati Riverfront: Assessee executed the work for SRFDCL works of construction of diaphragm wall; special fill for guide fund; concrete for anchor slab and RCC Hume Pipe and Box Culvert. Whether this activity falls within the taxable service defined under Section 65(97a) and 65(105)(zza) requires detailed examination at the time of final hearing of the appeal. While the main focus in the analysis in the adjudication order appears to reject the assessee's claim for availing benefit of the exclusionary clause in Section 65(97a) qua which it is claimed that services provided by the assessee to SRFDCL fall within the extended services provided in relation to restoration of water resources or water bodies. On prima facie analysis it does not appear that the services provided by the assessee are comprised within the definition of "Site Formation and Clearance, Excavation and Earthmoving and Demolition" services: Directions issued for partial pre deposit. |
STO 2013 CESTAT 488
Site formation: Demand: Notification granting exemption for such activities when carried out for railways: term "railways", not been defined under the Finance Act 1994 and in respect of which the said Act does not refer to the Railways Act, has ordinarily to be understood in accordance with common parlance Construction railways by private agencies in connection with their business activities is not unknown to trade and commerce. It is also undeniable that railway lines so constructed are operated by the railways: Hence, prima facie exemption found to be available: Unconditional stay granted.
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STO 2012 CESTAT 988
Site Formation: Commercial Construction Service: No abatement available for Site formation: Appellants also did not include value of free supplied materials: High Court orders granting interim stay on non inclusion of such value, not accepted: Directions issued for making partial pre deposit.
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STO 2012 CESTAT 272
Site Formation Service: Demand: Stay: cost of excavations and diesel involved in the execution of contracts not included: Similar matters stay given by Tribunal followed in this case also. |
STO 2011 CESTAT 220
Service Tax: Valuation: Site Formation and Clearance, Excavation and Earthmoving and Demolition Services: Value of material received free of cost: Notification No. 12/2003-S.T. dated 20.06.2003:The appellants have taken the value to be the gross amount without considering other provisions provided in Section 67 of the Finance Act. 1994 and the Valuation Rules. The fact that it is not only the supplies made by the service provider or materials used by him which form a part of the service, but also other considerations which are non-monetary in nature, are also required to be taken into account. (para 7.2)
Service Tax: Valuation: Site Formation and Clearance, Excavation and Earthmoving and Demolition Services: Notification No. 12/2003-S.T. dated 20.06.2003: The exemption from payment of service tax due on the value of the goods and materials extended under the said Notification is subject to the condition that such materials are sold by the service provider to the recipient of the service. Do not find that the assessee has a case that it sold the items involved to the service recipient and qualified for the exemption under the said Notification. (para 8)
Service Tax: Appeal: Pre-deposit: The applicant has not made a strong case for complete waiver of dues confirmed against it for the period 18.04.2006 to 6.2009. In the circumstances, they shall deposit an amount of Rs. 10,00,00,000/- ((para 11)
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STO 2010 CESTAT 666
Service Tax: Waiver of pre-deposit : Services rendered falls under the category specified under Section 65(97a) of the Finance Act, 1994 but is eligible for exemption under the exclusion clause as it is in relation to irrigation watershed development and drilling, digging, repairing, renovating or restoring of water sources of water bodies, namely, Sabarmati river.Waiver of pre-deposit allowed.(Para 2).
Application in Appeal: ST/Stay-1604/2009, ST/224/2009, Arising Out of: Order-in-Original No. 05/STC/BR/09-10 dated 06/07/2009, passed by: Commissioner of Service Tax, Mumbai.
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STO 2010 CESTAT 149
Service Tax: Site formation and clearance, excavation and earthmoving and moving services: Jurisdiction:. In respect of jurisdiction, the order is placed Head Office which is at Kolkata and the bills are raised from the Head Office. In the circumstances, prima-facie merit in the contention of the appellants in respect of jurisdiction. (para 5)
Service Tax: Site formation and clearance, excavation and earthmoving and moving services: Pre-deposit: As the contract is for removal of overburden, hence, prima-facie, no merit in the contention that contract is for mining of ore. Applicants are directed to deposit an amount of Rs.2.00 Crores (para 6)
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STO 2010 CESTAT 12
Site Formation Service: The activity of undertaking Work Order for laying of Optical Fibre Cable, prima facie not covered under Site formation services. Stay granted.
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STO 2009 CESTAT 1574
Service Tax: Services of ‘site formation and clearance, excavations, earth moving and demolition services': Issue of show cause notice or its confirmation by authority not holding jurisdiction: Appellants are doing their activity at Bilaspur, Madhya Pradesh. The only reason for confirmation of demand by the adjudicating authority was on the fact that respondents had a centralized billing system at Vijayawada which is falling within the jurisdiction of Guntur Commissionerate. Commissioner (Appeals) while setting aside the impugned order recorded the following finding--The proviso to Rule 4 (3A) of the Service Tax Rules 1994 reads as follows:- "Where an assessee is providing a taxable service from more than one premises or offices, and does not have any centralized billing systems or centralized accounting systems, as the case may be, he shall make separate applications for registration in respect of each of such premises or offices to the jurisdictional Superintendent of Central Excise." In the present case, it has not been alleged that the appellants have opted for centralized billing/accounting system. In the absence of proof of exercise of such an option by the appellant and that too within the jurisdiction of the respondents, the authorities in Guntur Commissionerate have no jurisdiction either for issuance of the demand notice or for the confirmation of the said demand." The said finding of the Commissioner (Appeals) are in accordance with law as has been laid down by this Tribunal in the case of Oris India Pvt. Ltd. Vs CCE STO 2007 CESTAT 1216 and also the Board Circular No 75/05/04 ST dated 3.3.04. Board circular dated 3.3.04 settles the issue in favour of respondent which read as : "In view of the above, the matter of power of adjudication of officers of Central Excise in relation to Service Tax Rules 1994 was re-examined and it has now been decided by the Board that adjudication of all the cases relating to Service Tax may be carried out only by the jurisdictional ACs/DCs of the Central Excise as per seciton73 of the Finacne Act 1994."In this case, the activity of rendering services was done at Bilaspur and it is on record that the respondent had taken service tax registration from Chindwan Division of Bhopal Commissionerate in March 2006. If that be so, a show cause notice dated 13.10.2006 issued by the Guntur Commissionerate for the demand of service tax on services rendered at ‘Chindwan Division’ of Bhopal Commissionerate cannot be held as correct in law and to proceed against the respondents for the violation, if any. There is no jurisdiction of the Guntur Commissionerate to proceed against the respondents' default, if any, at other Commissionerate. Accordingly, the impugned order is correct and does not suffer from any infirmity.(Para 6).
Revenue appeal rejected.
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STO 2009 CESTAT 1384
Service Tax: “Site formation and clearance, excavation, earth moving and demolition services” during the period 1.10.06 to 31.03.07: The work involved is to remove the iron slime and soil accumulated in the dam. In terms of the Board's Circular F/B1/6/05 TRI dated 27.7.2005 the entry relates to work preparatory to construction of buildings, factory or any civil structure, activity of mining or laying of cables or pipes etc. The entry covers items of work undertaken to make a site suitable for construction of buildings, factory or similar civil structure. The impugned activity of desilting of dam is not covered by the entry(Para 3,5).
Construction of dams: Scope and liability: The work undertaken by the appellant is construction of a dam. Notification No 17/2005 ST dated 7th June 2005 exempts activities rendered in the course of construction of airports, roads, bridges, dams etc., from service tax under the head ‘site formation and clearance, excavation etc.' Construction of a dam cannot be subjected to tax classifying it as "site formation and clearance excavation and earth moving and demolition."(Para 6).
Stay granted.
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STO 2009 CESTAT 1266
Service Tax: COD application: There was delay due to withdrawal of relevant order by Incom Tax authorities during search operation, which was not noticed by the appeallant. There are reasonable grounds to condone delay.
Site formation: Scope: On the very same issue, this Bench of the Tribunal has passed the Final Order Nos. 1254 & 1255/2008 dated 24.10.2008 wherein it was held that the removal of overburden during the relevant period would not come under the ambit of "site formation". The issue involved in this case is identical.(Para 2).
Application for COD and stay allowed.
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STO 2009 CESTAT 588
Service Tax: Cenvat credit of duty paid on tippers: The credit availed had already been reversed before the adjudication was completed, and as per decision of the Punjab and Haryana High Court in the case of CCE Vs. Maruti Udyog Ltd. - CEO 2006 P&H 53 wherein it has been held that assessee is not liable to pay interest when the modvat credit irregularly taken was not utilized. This decision has been upheld by the Hon'ble Apex Court as reported in Commissioner Vs. Maruti Udyog Ltd. - CEO 2007 SC 77. In view of the fact that the appellants had already reversed the ineligible credit taken and also in view of the above decision, complete waiver of the pre-deposit of the penalties and interest is allowed. (Para 5,6).
Stay allowed.
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