Transportation of coal within mining areas is classifiable as GTA service, not mining service.

The appellant, a works contractor registered for service tax, rendered services to Tata Steel Ltd.

The Department compared the appellant’s ST-3 returns with income-tax information and issued show-cause notices demanding tax for 2008–09 to 2013–14 under the categories of Mining of Mineral, Oil or Gas Service, Management, Maintenance and Repair Service, and Supply of Tangible Goods Service.

The Commissioner confirmed the demands, interest and penalties, and appropriated ₹30,000 already paid.

On appeal, the appellant contended that its principal activity was transportation, that the other services fell within the small-scale exemption threshold except in specified years, and that the demand for April 2013–March 2014 was unsupported by findings.

1. Whether the appellant’s activities under its Tata Steel work orders were classifiable as Mining of Mineral, Oil or Gas Service or as transportation/GTA service.

2. Whether service tax was payable on Management, Maintenance and Repair Service and Supply of Tangible Goods Service after applying the small-scale exemption threshold.

3. Whether the demand of ₹1,43,481 for April 2013–March 2014, and the related penalties, could be sustained.

Section 65(105)(zzp) of the Finance Act, 1994 covers transport of goods by road, while Section 65(105)(zzzy) concerns services in relation to mining; the classification must reflect the essential nature of the activity.

The Tribunal applied Section 66F’s essential-character principle and CBEC Circular No. 104/07/2008-ST, which treats ancillary activities as part of a composite service where transportation is the principal service.

It relied on Commissioner of Central Excise and Service Tax, Raipur v. Singh Transporters, 2017 (4) G.S.T.L. 3 (S.C.), holding that transportation of coal within a mining area is appropriately classified as transport of goods by road rather than mining service.

The Tribunal also referred to Rule 2(1)(d)(i)(B) of the Service Tax Rules, 1994 and Notification No. 30/2012-ST concerning recipient liability for GTA services, and to the principle that road transportation without a consignment note is outside the relevant taxable GTA category.

For the other services, it applied the ₹10 lakh threshold under Notification No. 8/2008-ST, as amended by Notification No. 33/2012-ST.

The work orders included transportation and related activities, but the Tribunal found that transportation was the principal activity: transportation accounted for the majority of receipts in each of the financial years examined.

Applying the Board circular and Singh Transporters, it treated ancillary work as part of the transportation service and rejected classification under mining service; it also found the recipient companies liable under the applicable reverse-charge provisions where the service qualified as GTA.

For Management, Maintenance and Repair Service and Supply of Tangible Goods Service, the combined turnover exceeded the ₹10 lakh exemption threshold only in 2010–11 and 2011–12.

The Tribunal therefore confirmed tax on ₹18,958 for 2010–11 and the full value of ₹8,66,678 for 2011–12, calculated at 10.30%, with interest.

It found no established suppression warranting a penalty on those amounts and concluded that the 2013–14 demand could not be sustained, including because the appellant was entitled to the SSI exemption on the available record.

The demand under Mining of Mineral, Oil or Gas Service, with related interest and Section 78 penalty, was set aside.

Tax and interest were sustained only on the specified values for 2010–11 and 2011–12; the demand of ₹1,43,481 for April 2013–March 2014 was set aside.

The Tribunal directed appropriation of the ₹30,000 already paid and of the remaining payable amount from the pre-deposit.

The Section 76 penalty was set aside, while the Section 77 penalty for delayed filing of returns was upheld.