Custom, Excise & Service Tax Tribunal
Mumbai vs Elcome Surveys Pvt. Ltd on 4 June, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS: ST/251 & & 258/2006
[Arising out of Orders-in-Original No: 02 & 03/ST/SJS/06 dated 11/05/2006 passed by the Commissioner of Service Tax, Mumbai.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Commissioner of Service Tax
Mumbai
Appellant
Vs
Fugro Geonics Pvt. Ltd.
Elcome Surveys Pvt. Ltd.
Respondents
Appearance:
Shri V.K. Agarwal, Add. Commissioner (AR) for the appellant None for the respondents CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 04/06/2013 Date of decision: 04/06/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
There are two appeals arising from Orders-in-Original No: 02 & 03/ST/SJS/06 dated 11/05/2006 passed by the Commissioner of Service Tax, Mumbai. Since issue involved is common, they are taken up together for consideration and disposal.
2. In these appeals Revenue is the appellant and the respondents are M/s. Fugro Geonics Pvt. Ltd. and M/s. Elcome Surveys Pvt. Ltd. The respondents undertook survey work such as Hydrographic Survey, Oceanographic Survey, Geo-Physical and Geo-Technical survey for their clients such as ONGC, ENRON, Reliance Industries and Cairn Energy who are engaged in oil exploration. The services provided was in the nature of positioning service, hydrographic survey, oceanographic survey, seismic survey, geophysical and geo-technical survey and engineering survey which enable the recipient of the service for positioning of drilling rigs, determination of co-ordinates, to identify sub seabed features below sea bed, route survey, etc. The department was of the view that the activities undertaken by the appellants merited classification under Consulting Engineers Service and accordingly issued notices demanding service tax of ` 3,80,52,174/- for the period February, 2002 to 09/09/2004 and ` 54,63,677/- for the period 1997-98 to 31/01/2002 from M/s. Fugro Geonics Pvt. Ltd. vide notices dated 14/11/2005 and 22/08/2002. In the case of Elcome Surveys Pvt. Ltd., the demand was for ` 2,06,31,246/- for the period 01/07/1997 to 31/03/2002 vide notice dated 04/07/2002 and ` 2,24,90,938/- for the period 2002-03 to 2003-04 (up to 14/05/2003) vide notice dated 04/08/2005. The learned Commissioner examined the matter at length and came to the conclusion that the respondents are providing survey services which resulted in collection of data about the features of the sea-bed and the data so collected was supplied to the client. Accordingly, he held that the respondents had not rendered any consultancy, advice or technical assistance to the clients and, therefore, the services rendered does not merit classification under Consulting Engineers Service. On the other hand, he concluded that the services might be properly classifiable under Survey and Exploration of Minerals as defined in Section 65(104A) read with Section 65(105)(zzv) of the Finance Act, 1994, which came into force in 2004 and since the impugned demands pertained to the period prior to that, no service tax demand would accrue on the respondents and accordingly, he dropped the proceedings. The Revenue is aggrieved of the same and is before us.
3. The grounds urged in the appeal memorandum is that the as per the Memorandum of Articles of Association of the respondent-firms in Clause III(B)(22) / III(B) 4 it is mentioned that To provide consultancy, manpower requirement and operational maintenance for the attainment of the main objects and therefore, the respondents were rendering consultancy services. In view of the above, service rendered merits classification under Consulting Engineering Service.
4. The Additional Commissioner (AR) appearing for the Revenue reiterates the grounds urged in the appeal memorandum.
5. None appeared for the respondents.
6. We have considered the submissions made by the Revenue and have gone through the records of the case.
6.1. In the impugned order, it is clearly mentioned that the respondents have carried out hydrographic, oceanographic, geophysical, geo-technical investigation, harbor development surveys, etc. and these services have been carried out in connection with oil exploratory operations to be undertaken by the clients. Based on the survey, information/data has been generated and such information has been passed on to the clients. The learned adjudicating authority in para 3.21of the impugned order has clearly recorded as follows:
3.21 I have also gone through the sample survey reports submitted by the notices. The reports reveal the following:
(i) they carry out surveys using sophisticated equipments for that purpose and collect data relating to the sea-bed. The data is processed and reported to the client in the form of a chart/drawing;
(ii) the survey results mentioned in the report shows that the report is only a statement of fact. e.g. features of the sea-bed like water depth, sedimentation of the sea floor, the geology, salinity, evenness, etc. are reported. There is no advice or consultancy given to the client:
(iii) the report also describes the notices as contracts or surveyors;
(iv) consulting engineers like Engineers India Ltd. supervise the work of the notices. 6.2. From the findings of the adjudicating authority, it is evident that no service relating to advice, consultancy or technical assistance had been rendered by the respondents. Further, Survey and Exploration of Minerals were brought under the tax net in budget 2004. Section 65(104A) defines Survey and Exploration of Minerals means geological, geophysical or other prospecting surface or sub surface surveying or map making survey in relation to location or exploration of deposits of mineral, oil and gas. Section 65(105)(zzv) defined taxable service as any service provided or to be provided to any person, by any person, in relation to survey and exploration of mineral. When the activity undertaken by the respondents are considered in the light of these definitions, it is clear that such activity would merit classification under Survey and Exploration of Minerals. It is a well settled position in law that when an activity is covered under a specific entry, which came later, then service tax cannot not be demanded on the same activity under a different category for the prior period, as held by the honble High Court of Bombay in the case of National Shipowners Association vs. Union of India 2004 (13) STR 235 (Bom.). Therefore, in the appeals before us, for the period prior to budget 2004, the activity undertaken by the respondents cannot be classified as Consulting Engineers Service especially when Survey and Exploration of Minerals Service has not been carved out of Consulting Engineers Service. The decision of this Tribunal in the case of Rolls Royce Industries Power (I) Ltd. vs. Commissioner of Central Excise 2004 (171) ELT 189 and Glaxo Smithkline Pharmaceuticals Ltd. vs. Commissioner of Central Excise 2005 (188) ELT 171 relied upon by the adjudicating authority are also relevant and applicable to the facts of the present case.
7. In view of the above, we do not find any merit in these appeals filed by the Revenue. Accordingly, we dismiss the same.
(Dictated in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 2