Ram Nagina Pamdey vs Dhanbad

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
EASTERN ZONAL BENCH: KOLKATA

REGIONAL BENCH – COURT NO. 2

Service Tax Appeal No. 75647 of 2017

(Arising out of Order-in-Appeal No. 32/DNB/2017 dated 27.02.2017 passed by the
Commissioner (Appeals), Central Excise and Service Tax, 605, Mahabir Tower, Main
Road, Ranchi – 834 001)

M/s. Ram Nagina Pandey
Purnadih, P.O.: Jorapokhar,
Dhanbad – 828 112 (Jharkhand)
: Appellant

VERSUS

Commissioner of Central Excise and Service Tax
Dhanbad Commissionerate,
H.E. School Road, Vistipara, Hirapur,
Dhanbad – 826001 (Jharkhand)
: Respondent

APPEARANCE:
Shri Rajesh Kumar Kapardar, Advocate, for the Appellant

Shri Argho Mukherjee, Authorized Representative, for the Respondent

CORAM:
HON’BLE SHRI R. MURALIDHAR, MEMBER (JUDICIAL)
HON’BLE SHRI K. ANPAZHAKAN, MEMBER (TECHNICAL)

FINAL ORDER NO. 76574 / 2026

DATE OF HEARING: 30.09.2026
DATE OF DECISION: 29.10.2026
ORDER: [PER SHRI K. ANPAZHAKAN]

The present appeal has been filed against the
Order-in-Appeal No. 32/DNB/2017 dated 27.02.2017,
wherein the Ld. Commissioner (Appeals), Central
Excise and Service Tax, Ranchi has, inter alia, upheld
the demand of Service Tax confirmed under the
category of "mining of mineral, oil or gas service"
in the Order-in-Original No. 20/2015/S.Tax/
RNP/ADC/DNB(H) dated 30.11.2015.

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2. The facts of the case are that M/s. Ram Nagina
Pandey, Purnadih, P.O. Jorapokhar, Dhanbad,
Jharkhand (hereinafter referred to as the “appellant”)
is engaged in the business of Erection and
Commission and Works Contract services under
Service Tax Registration No. ADDPR4398GSD002.
2.1. Enquires were made by the Revenue about the
total consideration received by the appellant for the
period from 2008-09 to 2013.
2.1. Consequent to scrutiny of the work orders,
payment particulars, and financial documents, the
Revenue alleged that the appellant had provided
taxable services to its clients, namely, M/s. Tata Steel
Limited, Jamadoba and M/s. Monnet Ispat & Energy
Ltd., Raigarh, during the relevant period, in respect of
which appropriate Service Tax has not been
discharged under the category of ‘mining of mineral,
oil and gas service’. Apart from the above, it was also
alleged that the appellant had provided ‘manpower
recruitment or supply agency service’ and ‘rent-a-cab
scheme operator’s service’ to certain service
recipients during the underlying period, for which
appropriate Service Tax had also not been discharged.
3. On the basis of the said allegations, a Show
Cause Notice was issued on 23.10.2013, demanding
Service Tax amounting to Rs.47,02,778/- (inclusive of
cesses), in respect of mining services, manpower
recruitment or supply agency services and rent-a-cab
services rendered by the appellant during the
concerned period viz. 2008-09 to 2012-13, by
invoking the extended period of limitation, along with
interest; the said Notice also proposed imposition of
penalties under Sections 76, 77 and 78 of the Finance
Act, 1994.

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3.1. The appellant filed his detailed reply along with
the documentary evidence.
3.2. However, the ld. adjudicating authority, vide the
Order-in-Original No. 20/2015/S.Tax/
RNP/ADC/DNB(H) dated 30.11.2015 confirmed the
entire demand of Rs.47,02,778/- (inclusive of cesses),
as proposed in the Notice, along with interest thereon,
besides imposition of penalties of Rs.47,02,778/-
under Section 78 of the Act and of Rs.10,000/- under
Section 77 of the said Act. The ld. adjudicating
authority also ordered appropriation of the amount of
Service Tax of Rs.6,15,261/- which stood paid by the
assessee-appellant under the category of ‘works
contract service’
3.3. The appellant challenged the aforesaid order
before the Ld. Commissioner (Appeals), Central
Excise and Service Tax, Ranchi, who, vide the
impugned order, affirmed the order dated 30.11.2015
passed by the ld. adjudicating authority.
3.4. Hence, the appellant is before the Tribunal.
4. At the outset, it has been pointed out by the Ld.
Advocate appearing on behalf of the appellant that by
way of the present appeal, they are contesting the
demand raised and confirmed against them under the
category of “mining of mineral, oil or gas Service", and
are not contesting the demands insofar as the same
relate to the categories of ‘manpower recruitment or
supply agency service’ and ‘rent-a-cab scheme
operator’s service’. However, even on such count
where the demand is not being contested, the
appellant submits that they are contesting the
imposition of penalties thereon.

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4.1. The Ld. Advocate appearing on behalf the
appellant makes the following submissions: -
(i) The dispute arises from various work orders
executed by the Appellant for M/s. Tata Steel
Ltd. and M/s. Monnet Ispat and Energy Ltd., at
Jamadoba. The specific nature of the works
executed under these work orders inter alia
includes:
• Painting in underground/surface areas.
• Installation and fabrication of belt
conveyors.
• Dismantling, transporting, or installation
within the mining area.
• Dismantling of existing hoppers and
fabrication of new hoppers.
• Dismantling and fitting of Coal Handling
Plant (CHP) material & recirculation pumps.
• Underground engineering jobs and
construction of maintenance sheds at open-
cast areas.
• Carrying and fixing of CGI sheets.
•
Installation of bunkers and spray/brush
painting at the colliery.
(ii) The Contention of the Revenue is that that all
these activities were performed within the
geographical boundaries of the mining lease
area of the leaseholders and hence, the entire
value of the contracts is taxable under the
category of "Mining of Mineral, Oil or Gas
Services". The appellant submits that this
classification is wholly erroneous,
unsustainable, and contrary to the settled
principles of tax jurisprudence.

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(iii) The disputed work orders involves a composite
element—specifically, the fabrication of new
hoppers, installation of belt conveyors, and
fixing of CGI sheets. These activities required
both the deployment of skilled labour and the
transfer of property in goods (steel, sheets,
consumables). The Hon’ble Supreme Court in
the landmark case of Commissioner of Central
Excise & Customs v. Larsen & Toubro Ltd. [2015
(39) S.T.R. 913 (S.C.)] categorically held that a
composite contract cannot be vivisected and
taxed under individual service categories like
Industrial Construction or Erection/Installation.
(iv) The lower authorities failed to properly
appreciate the financial records and invoices
submitted during the proceedings. The
Appellant has in fact paid applicable VAT on the
material portion involved in the execution of
these composite contracts, which conclusively
establishes that the appropriate State VAT
authorities recognized these transactions as a
"deemed sale" of goods under Article
366(29A)(b) of the Constitution of India.
(v) The appellant relies on the case law of
Commissioner of Central Excise & Service Tax v.
M/s Singh Transporters [2017 (4) G.S.T.L. 257
(S.C.)]. In this landmark case, the Revenue
attempted to classify the transportation of coal
within a mining leasehold area, specifically from
the pithead to the railway siding, under the
category of "Mining Service". The Hon’ble
Supreme Court dismissed the Revenue's appeal
in toto. The Hon’ble Apex Court held that the
mere execution of an activity inside a mine does

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not change its core character. Shifting or
transportation inside a mine remains a distinct
logistical operation falling under the heading of
Goods Transport Agency (GTA) service. This
ruling establishes the absolute rule that an
activity performed inside a mine is not
automatically a mining service and cannot be
classified as such by stretching the statutory
definition.
(vi) Regarding invocation of extended period, the
Appellant submitted that the Show Cause Notice
(SCN) was issued on 23.10.2013 for the from
2008-09 to 2012-13 . Under the normal period
of limitation prescribed under Section 73(1) of
the Finance Act, 1994, the Revenue is strictly
bound to raise demands within eighteen months
(or one year, as applicable during the relevant
periods under dispute) from the relevant date.
The Department has mechanically invoked the
extended period of limitation under the proviso
to Section 73(1). The Appellant submits that the
invocation of the extended period is completely
unauthorized, illegal, and factually untenable in
the present case.
4.2. In view of the above submissions, the
Ld. Advocate for the appellant prays that the
impugned order be set aside and the appeal filed by
them be allowed, granting consequential reliefs, as
per law.
5. The Ld. Authorized Representative of the
Revenue appearing before us submitted that the
allegations in the Show Cause Notice and findings in
the Order-in-Original show that the appellant though
was providing service right from 2008-09 onwards,

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they have obtained the Service Tax Registration only
in 2011 that too only for some of their services; that
even as they claimed that they have provided only
Works Contract service, they have not provided any
evidence towards payment of VAT for the goods
supplied by them. It is submitted that the lower
authorities have given detailed findings and then only
have confirmed the demand, interest and penalty.
Hence, the Ld. Authorized Representative of the
Revenue sought to justify the confirmed demand.
6. Heard both the sides and perused the records of
the case.
7. Regarding the demands confirmed under the
category of ‘mining of mineral, oil or gas service’
(‘mining service’ for short), we find that the
Department has classified the entire activity
undertaken by the appellant under the category of
mining service essentially on the premise that any
work performed inside a mining perimeter
automatically transforms into a mining service. We do
not agree with this inference made by the Revenue.
7.1. "Mining of Mineral, Oil or Gas Service" has been
defined under Section 65(105)(zzzy), of the Finance
Act, 1994, which contemplates activities that are
directly, intrinsically, and operationally connected to
the core processes of mining—such as extraction,
raising, drilling, exploration, or site formation for
extraction. The activities of the appellant (e.g.,
painting, fixing CGI sheets, fabricating maintenance
sheds) are auxiliary, structural, and infrastructure-
related. They do not advance or alter the process of
mineral extraction. A civil or mechanical engineering
contract performed within the mining area, does not
lose its character as a civil or mechanical work merely

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because it is executed on land leased for mining.
Classification of a service must be determined by the
essential character of the service rendered i.e.,
the essentiality test, and not by the business profile
of the service recipient.
7.2. We have examined the said services rendered by
the appellant. On examination, we find that each
activity falls under separate, mutually exclusive
service entries specifically carved out by the
legislature, as indicated below:
• Painting in Underground/Surface Areas &
Spray/Brush Painting at the Colliery:
Routine cosmetic maintenance and applying
protective anti-corrosive coats to existing
physical infrastructure fall squarely under
Management, Maintenance or Repair
Service [Section 65(105)(zzg)] . They have
zero operational nexus with the extraction of
minerals from the earth.
• Installation and Fabrication of Belt
Conveyors: Belt conveyors are material-
handling systems used to move bulk materials
after extraction. The mechanical assembly and
erection of such systems fall under Erection,
Commissioning or Installation Service
[Section 65(105)(zzd)] .
• Dismantling of Existing Hoppers and
Fabrication of New Hoppers: Hoppers are
industrial storage/funnel structures. Fabricating
or dismantling steel structures is a specialized
mechanical engineering job falling under
Erection/Installation services or structural
fabrications—not mining.

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• Dismantling and Fitting of Coal Handling
Plant (CHP) Material & Recirculation
Pumps: A Coal Handling Plant (CHP) processes,
washes, and sizes coal after it has already been
completely mined and brought to the surface.
Maintaining or replacing mechanical pumps and
components within a CHP constitutes post-
extraction equipment upkeep, classifiable under
Maintenance or Repair services.
• Underground Engineering Jobs &
Construction of Maintenance Sheds at
Open-Cast Areas: Constructing physical,
immovable civil structures (like civil sheds or
engineering masonry) is a classic civil
engineering activity falling under Commercial
or Industrial Construction Service [Section
65(105)(zzq)]. The demand under the
category of ‘mining service’ is thus unfounded.
• Carrying and Fixing of CGI Sheets:
Replacing or fixing corrugated galvanized iron
(CGI) roofing sheets on buildings or sheds is a
pure civil roofing repair job classifiable under
Commercial Construction or Maintenance
services.
• Installation of Bunkers: Bunkers are large
storage containers for coal storage post-
extraction. The civil or structural installation of
storage facilities is distinct from the operational
act of mining.
• Dismantling, Transporting, or Installation
within the Mining Area: Moving structural or
mechanical items internally within a mine site is
handling and logistics. The Hon'ble Supreme

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Court in the landmark case of Commissioner
of Central Excise v. M/s Singh Transporters
[2017 (4) G.S.T.L. 257 (S.C.)] explicitly ruled
that transport operations within a mining area
do not automatically become a mining service.
7.3. Thus, we find that the demand under the
category of mining services cannot be sustained.
8. Furthermore, we observe that prior to 01.06.2007,
composite contracts could not be artificially split or
taxed under generic categories. Post 01.06.2007,
they are strictly classifiable only under Section
65(105)(zzzza) as Works Contract Service . The
Hon’ble Supreme Court in the landmark case of
Commissioner of Central Excise & Customs v. Larsen
& Toubro Ltd. [2015 (39) S.T.R. 913 (S.C.)]
categorically held that a composite contract cannot be
vivisected and taxed under individual service
categories like Industrial Construction or
Erection/Installation.
8.1. In this regard, we have perused the work
orders, agreements, and execution documents
entered into by the appellant with M/s. Tata Steel
Limited and M/s. Monnet Ispat & Energy Ltd. The
documents submitted by the appellant reveals that
the activities assigned to the appellant including the
installation and fabrication of belt conveyors,
dismantling and fabrication of new hoppers, carrying
and fixing of CGI sheets, and installation of bunkers,
were composite and indivisible in nature . These
contracts explicitly mandated the deployment of
skilled labour alongside the extensive supply and
consumption of materials, steel, components,
consumables, and goods.

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8.2. We find that the lower authorities have
proceeded on the premise that the appellant did not
charge Value Added Tax (VAT) on their invoices,
thereby concluding that the transactions do not
qualify as works contracts. We observe that the lower
authorities failed to properly appreciate the financial
records and invoices submitted during the
proceedings. On perusal of the documents submitted
by the Appellant, we observe that the appellant has
in fact paid applicable VAT on the material portion
involved in the execution of these composite
contracts. Sample copies of such VAT-paid
commercial invoices/purchase orders are extracted
below for ready reference: -
▪ Purchase Order No. 2100178893/931 dt. 16.07.2009

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▪ Purchase Order No. 2100171422/931 dated 28.04.2009

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8.3. In addition to the above, the appellant has
placed on record copies of the relevant statutory VAT
Returns duly filed before the Jharkhand Commercial
Taxes Department. For ease of reference, the VAT
return filed by the for the month of October, 2010 is
reproduced hereinbelow: -

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8.4. The documents extracted above conclusively
establish that the appropriate State VAT authorities
recognized these transactions as a "deemed sale" of
goods under Article 366(29A)(b) of the Constitution of
India.
8.5. Thus, we observe that the said services
rendered by the appellant are appropriately
classifiable under the category of ‘works contract
service’ only. We find that there is no demand in the
impugned Notice under the category ‘works contract
service’. Since the Revenue has failed to invoke ‘works
contract service’ in the Show Cause Notice, we are of
the view that the demand confirmed under ‘mining
services’ for these composite contracts is legally not
sustainable. Accordingly, we hold that the demand of
Service Tax confirmed under the category of mining
services in the impugned order is unsustainable and
hence, we set aside the same.
9. Regarding invocation of extended period, we find
that the Show Cause Notice (SCN) was issued on
23.10.2013 for the period from 2008-09 to
2012-13. We observe that the primary prerequisite
for triggering the extended period is the presence of
fraud, collusion, wilful misstatement, suppression of
facts, or contravention of statutory provisions with an
explicit intent to evade payment of tax . The record
demonstrates that none of these ingredients exists in
this case. We find that the appellant was a duly
registered service provider with the Service Tax
Department under the categories of ‘erection,
commissioning or installation service’ and ‘works
contract service’. The appellant has been discharging
its tax compliance by filing its statutory ST-3 Returns
over the disputed years. The entire volume of

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transactions and receipts were captured within the
operational framework of these returns and also
accounted for in the appellant's statutory books of
accounts. It is also a fact on record that an amount of
Rs. 6,15,261/- had been paid under ‘works contract
service’ during the impugned period, which was
ordered to be appropriated by the authorities below,
which further shows that the appellant was under a
bona fide belief as regards the nature of the services
being rendered. In any case, the Department has
failed to produce any independent or corroborative
evidence to prove that the appellant acted with a
fraudulent mind or a wilful intent to evade payment of
tax in the present case. Thus, we are of the view that
the allegation of suppression of facts with intention to
evade the tax has not been established in this case.
Accordingly, we hold that the demands confirmed in
the impugned order by invoking the extended period
of limitation are not sustainable and hence, the same
are liable to be set aside on the ground of limitation.
10. Further, from the submissions made by the
appellant before us, we note that the appellant has
not contested the demands raised under the
categories of ‘manpower recruitment or supply agency
service’ and ‘rent-a-cab service’, the demand for
which pertains to the period from Financial Year
2008-09 to Financial Year 2011-12, as can be seen
from Annexure A-2 to the Show Cause Notice (SCN).
The appellant has provided a breakup of the demands
not contested, which is as under: -

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Total
Service Tax
Service
Category
FY 2008-09
FY 2009-10
FY 2010-11
FY 2011-12
(₹)
(₹)
(₹)
(₹)
(₹)
Rent-a-
3,798 6,898 39,882 20,110 70,688
Cab
Manpower
2,292 4,740 0 10,251 17,283
Supply
Total Non-
Contested
Liability
6,090 11,638 39,882 30,361 87,971

10.1. Since the aforesaid issues are not contested
before us, we do not interfere with the findings of the
authorities below to the extent of confirmation of
Service Tax liabilities on the said issues. Accordingly,
we order that the confirmed demands in respect of
‘manpower recruitment or supply agency service’ and
‘rent-a-cab service’, along with interest, be
appropriated against the payment of Rs.6,15,261/-
already made by the appellant.
11. As regards the consequential issue of penalties
imposed upon the appellant, as already observed
hereinbefore, we note that the Revenue has failed to
bring forth any cogent evidence to prove mala fide
intent on the part of the appellant. Since the essential
ingredients of fraud, collusion, or wilful suppression
with intent to evade tax are absent, the invocation of
Section 78 is untenable and hence, the same is set
aside. The record also shows that the appellant had in
fact deposited an amount of Rs.6,15,261/- under the
category of works contract service, which shows their
bona fides. Further, they have also conceded the tax
demands to the extent discussed above and prayed
for appropriation of the same against the tax already
paid by them. In that view, we also drop the penalty
imposed under Section 77 ibid.

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12. In the result, the appeal is allowed in these
terms, with consequential relief, if any, as per law.
(Order pronounced in the open court on 29.10.2026 )



(R. MURALIDHAR)
MEMBER (JUDICIAL)



(K. ANPAZHAKAN)
MEMBER (TECHNICAL)
Sd/-
Sd/-
Sdd