Custom, Excise & Service Tax Tribunal
M/S. Cgg Veritas Services Ltd vs Commissioner Of Service Tax, Mumbai on 17 September, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. ST/180/2010-Mum. (Arising out of Order-in-Appeal No. SB(84)84/STC/2009 dt.10.12.2009 passed by the Commissioner Central Excise (Appeals), Mumbai-I) For approval and signature: Honble Mr. Ashok Jindal, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see :
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy :
of the Order?
4. Whether Order is to be circulated to the Departmental :
authorities?
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M/s. CGG Veritas Services Ltd.
:
Appellant
VS
Commissioner of Service Tax, Mumbai
:
Respondent
Appearance
Shri Naresh Thacker, Advocate for Appellant
Shri M.S. Reddy, Dy. Commissioner (A.R) for respondent
CORAM:
Mr. Ashok Jindal, Member (Judicial)
Mr. P.S. Pruthi, Member (Technical)
Date of hearing : 17/09/2014
Date of decision : /2014
ORDER NO.
Per : P.S. Pruthi
The appellant are in appeal against the impugned order which upheld the order of Assistant Commissioner rejecting their refund claim under Section 11B of the Central Excise Act, 1944 read with Section 83 of the Finance Act, 1994.
2. The facts are that the appellants, known as M/s. CGG Marine, a Company incorporated in France, with representative office in Mumbai entered into two contracts with ONGC for seismic surveys for Oil and Gas Natural in blocks/sites awarded by Government of India in the Eastern and Krishna Godaveri basin Areas Offshore India. The appellants were of the view that they are not liable to pay service tax but were asked to pay Rs. 7,44,40,257/- which they paid under TR 6 Challans marked under protest for the period 1.4.2006 to 18.4.2006. The appellants claim was that service tax was not payable because the sites where survey was done were not in the designated areas of the Continental Shelf and Exclusive Economic Zone (EEZ) of India specified in Notification No. 1/2002-ST by virtue of which notification the provisions of Chapter V of Finance Act 1994 were made applicable to such areas. It was only in July 2009, vide notification No. 21/2009-ST, that the service tax provisions under Chapter V of the Finance Act, 1994 were made applicable to the Continental Shelf and EEZ in which their survey sites are located. They had paid service tax under protest and the tax was not passed on to M/s. ONGC Ltd. from whom a certificate dt. 24.9.2007 was produced before the service tax authorities. Therefore unjust enrichment was not applicable. The Commissioner (Appeals) held that by notification No. 21/2009, the words designated areas in the continental shelf in notification No. 1/2002 dt. 1.3.2002 were substituted by the words installation structures and vessels in the continental shelf of India and the EEZ of India. Therefore, according to Commissioner, the effect of substitution in the earlier notification resulted in notification No. 21/2009 having retrospective effect. He relied on the Honble Supreme Court decision in the case of Government of India Vs. India Tobacco Association reported in 2005 (187) ELT 162 (S.C.). Having decided the matter on merits, he stated that the issue of unjust enrichment becomes superfluous and redundant. He also rejected the fact that duty was paid under protest on the ground that the assessment under Section 70(1) of the Finance Act, 1994 was not challenged.
3. Heard both sides.
4. The Ld. Advocate Shri Naresh Thacker took us through the various relevant provisions of erritorial Waters, Continental Shelf, Exclusive Economic Zone and Other Maritime Zones Act, 1976 and the provisions of Service Tax Act. He stated that under the Maritime Zones Act, the Sovereignty of India extends over the Territorial Waters upto 12 nautical miles from the coastline. Further, in respect of the continental shelf and EEZ upto distance of 200 nautical miles, India has limited sovereign rights for exploitation of resources. The Service Tax Act extends to the whole of India. As per Circular 36/4/2001 dt. 8.10. 2001, the service tax levy was extended only to designated areas in the continental shelf and EEZ under notification No. 1/2002-ST. The designated areas are listed in Notification No. S.O.429(E) dt. 18.7.1986 and S.O. 643(E) dated 19.9.1996 issued by Ministry of External Affairs, Government of India. He showed maps indicating the location of areas off the Eastern Coast of India beyond 12 Nautical Miles where their exploration sites are located. These sites do not fall within the latitude and longitude of the designated areas designated by the Ministry of External Affairs under their above said notifications. Therefore no service tax was payable as the levy was extended only to the designated areas under notification No. 1/2002-ST dt. 1.3.2002. On being questioned that if the place of provision of service rendered by them is considered to be outside India, whether their activity would amount to import of services he replied that, firstly, they do not have any branch office in India but have only an office for communication. All operational maintenance work is done from their office located outside India. And, secondly, even otherwise if their activity is considered as import of services, the same would not be leviable to service tax during the period in dispute because service tax on import of services on reverse charge basis came into effect from 18.4.2006 when Section 66A of the Finance Act, 1994 was enacted whereas the period in dispute in the present case is 1.4.2006 to 18.04.2006
5. The Ld. A.R. did not dispute the fact regarding the location of the offshore sites in question falling fall outside the territorial waters limit of 12 Nautical Miles. However he vehemently argued that the Supreme Court decision in the case of Indian Tobacco Association (supra) laid down the law that substitution of a phrase in a notification would have retrospective effect.
6. We have carefully considered the submissions of both sides.
7. We note that there is no dispute in the facts. It remains beyond doubt, as explicitly explained by the Ld. Counsel, that the service tax levy during the period 2006 was operative only in the designated areas i.e. areas designated by notifications issued by Ministry of External Affairs and made applicable for levy of service tax under Service Tax notification No. 1/2002-ST dt. 1.3.2002. The survey sites where the appellants conducted their operations of seismic survey, did not fall in the designated areas. It was only in 2009 that notification No. 21/2009 extended the service tax levy to the continental shelf and EEZ in which their survey sites did fall. The Ld. Counsel also took us through the Supreme Court decision in the case of Indian Tobacco Association (supra) in some details to show that it would apply only in the case of beneficial legislation.
8. We have gone through the judgment. We note that the judgment states that in the interpretation of a statute, when a person is held to be eligible to obtain the benefit of exemption notification, the same should be liberally construed. Further, the judgement refers to State of Rajasthan Vs. Mangilal Pindwal in which Supreme Court upheld that the legislative practice of an amendment by substitution being incorporated in the text of all statute which had ceased to exist, and held that the substitution would have the effect of amending the operation of law during the period in which it was in force. The Supreme Court held that:
28.The? doctrine of fairness also is now considered to be a relevant factor for construing a statute. In a case of this nature where the effect of a beneficent statute was sought to be extended keeping in view the fact that the benefit was already availed of by the agriculturalists of tobacco in Guntur, it would be highly unfair if the benefit granted to them is taken away, although the same was meant to be extended to them also. For such purposes the statute need not be given retrospective effect by express words but the intent and object of the legislature in relation thereto can be culled out from the background facts.
It is clear from the judgement that it would apply to cases where the effect of a beneficial statute is sought to be extended. In the present case we have a reverse position where the effect of the amended notification if read retrospectively will have the effect of punishment. We therefore do not agree with the order of Commissioner (Appeals), who has not read the judgement in its proper perspective.
9. We note that the Commissioner did not consider the service as import of service. However, for the sake of discussion, we agree that the appellants only have a representative in India for communication purposes. The service was actually provided outside India because it was not performed in the designated areas i.e. in India. Even otherwise, the import of services became leviable to tax only w.e.f. 18th April 2006 and the period of dispute is prior to this date. We may emphasize that this view is only being expressed because it was raised during the hearing. As the Commissioner did not give a finding on this point, our decision to disagree with Commissioners order is not based on this argument.
9.1. The Commissioner has given amongst other reasons a strange reason for denying the benefit to the appellants. He states that the appellants did not produce a certificate from the naval authorities to prove their claim that the services were provided outside the territorial waters of India. The Commissioner gives this reasoning after discussing at length that the notification No. 21/2009 which extends the levy of service tax to the continental shelf and EEZ has retrospective application, meaning thereby that the Commissioner is convinced that the services were provided out side the territorial waters. The Commissioner is not taking a consistent stand in his reasoning. After all the discussion on this issue the Commissioner suddenly makes a point that certificate was required from naval authorities. The appellant have submitted evidence to show that their sites of survey fall outside the territorial waters with reference to the notification issued by Ministry of External Affairs. It is for the department to prove otherwise which they have not even attempted to do so because they have all along been trying to prove that notification No.21/2009 has retrospective application In fact, the entire reasoning in the Commissioners order pertains to the provisions of service in the Continental Shelf and EEZ.
10. The Commissioner has brushed away the appellants contention that duty was paid under protest and that the words under protest were clearly marked on the TR 6 Challans. The refund has been sought under the provisions of Section 11B of the Central Excise Act as made applicable to service tax by Section 83 of the Finance Act. The appellants claim falls well within the parameters of Section 11B. The Commissioner has held that since the assessment had attained finality the same could not be re-opened by way of refund claim. He relied on the decision of Supreme Court in Priya Blue Industries Ltd. Vs. Commissioner of Customs (P) (in Civil Appeal No.9045 of 2003. We find that the facts in the present case are at variance. In the present case there was no order of assessment. There is no assessment order against which the appellant could file appeal. The appellants were simply asked to pay during investigations. And hey deposited the amount under protest. This protest itself is a challenge to the assessment. Reliance is placed on Commissioner Central Excise Vs. Noble Grain India Pvt. Ltd. reported in 2009 (14) S.T.R. 617. The refund claim itself can be considered as a challenge to the assessment as held in Styleman Vs. CCE 2006 (198) ELT 559 (Tri.Chennai) and Manipal Media Network Vs. CCE 2009 (234) ELT 647 (Tri.Bang.) Their plea on unjust enrichment is that they have produced a certificate from ONGC that service tax has not been passed to ONGC. Further, they have submitted a certificate from the companys statutory auditors that the amount of service tax deposited is shown as receivables in the companys books. These facts have not been controverted by the Commissioner. Therefore, we see no reason to deny the refund claim.
11. The impugned order is set aside with consequential relief if any.
(Pronounced in court on ..)
(Ashok Jindal)
Member (Judicial)
(P. S. Pruthi)
Member (Technical)
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