'Mithi' is a river and not a drain
ON that ill-fated day in July 2005 when Mumbai was under water, Mithi rose to prominence.
The prestigious Bandra Kurla Complex (BKC) abuts Mithi, which unfortunately was never seen as a river but a giant nullah since times immemorial.
The Wikipedia describes Mithi (aka Mahim River) as a river in Salsette Island, the island of the city of Mumbai . It is a confluence of tail water discharges of Powai and Vihar lakes. However it is filthy mainly due to the presence of slums and the discharge of industrial effluents.
During the period 05/05/2006 to 31/07/2007, the appellant had undertaken dredging of 'Mithi River' under a contract with MMRDA. The CCE, Thane-II demanded service tax of Rs.91.23 lakhs from the appellant on the total amount collected from MMRDA for the work of dredging done in 'Mithi River'.
The appellant claimed that 'Mithi River' is not a river in popular parlance but only a 'storm water drain' and that "dredging" of a drain is not taxable in view of the definition of 'dredging' given in section 65(36a) of the FA, 1994.
The Revenue claimed that the Mithi was always known as a river and even the tender notice of MMRDA described it as a river and having obtained the dredging work with reference to such tender notice the appellant cannot plead that they were not dredging (the) river during the period of dispute.
The Bench agreed with the submission of the AR and upheld -
+ the confirmation of Service Tax demand of Rs.91,23,081/- along with interest thereon;
+ penalty of Rs.5000/-imposed under Section 77 of the FA, 1994.
However, the penalty of Rs.1 crore imposed under Section 78 of the Finance Act, 1994 was set aside. Please see 2013-TIOL-795-CESTAT-MUM.
The appellant took the matter to the Supreme Court. However, the Civil Appeals were dismissed.