Custom, Excise & Service Tax Tribunal
M/S Max Tech Oil And Gas Services Pvt. Ltd vs Cst, Delhi on 7 October, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING : 15/09/2016. DATE OF DECISION : 07/10/2016. Service Tax Stay Application No. 53799 of 2014 in Appeal No. 53383 of 2014 [Arising out of the Order-in-Original No. 29/ST/SRB/2014 dated 14/02/2014 passed by The Commissioner (Adjudication), Service Tax, New Delhi.] M/s Max Tech Oil and Gas Services Pvt. Ltd. Appellant Versus CST, Delhi Respondent
Appearance Shri B.L. Narsimhan, Advocate for the appellant.
S/Shri Govind Dixit and Sanjay Jain, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice Dr. Satish Chandra, President Honble Shri B. Ravichandran, Member (Technical) Final Order No. 54020/2016 Dated : 07/10/2016 Per. B. Ravichandran :-
The appeal is against order dated 14/02/2014 of Commissioner of Service Tax, New Delhi. The appellants are engaged in providing various taxable services and are registered with Service Tax Department. Consequent upon audit of the records of the appellant conducted in September 2010, the Department entertained a view that the appellants did not discharge service tax for the services of shot hole drilling and seismic job to their client during the years 2004-2005 and 2005-2006. Accordingly, proceedings were initiated against the appellant to demand and recovery service tax of Rs. 56,72,903/- alongwith proposal to impose penalties under various provisions of Finance Act, 1994. On completion of the adjudication proceedings the impugned order was passed. The Original Authority confirmed the service tax demand and also imposed equal amount of penalty under Section 78 alongwith the penalty of Rs. 5,000/- under Section 77 of the Act.
2. The appellant contested the impugned order mainly on the ground that the activities undertaken by them cannot be covered under taxable service of survey and exploration of minerals as they have only undertaken sub-contract work for M/s Shiv-Vani Oil & Gas Exploration Services Ltd., who in turn have contractual arrangement with ONGC. Before proceeding with the merit of the main appeal, we note that the stay application is still pending. Since, the main appeal itself being taken up for disposal, we waive the requirement of pre-deposit and take up the main appeal itself.
3. We have heard both the sides and perused the appeal records. The relevant statutory provisions relating to the present appeal are as below :-
Section 65 (104a) of the Act and Section 65 (105) (zzv) of the Act read as under :
Section 65 (104a) of the Act Survey and exploration of minerals means geological, geophysical or other prospecting, surface or sub-surface surveying or map making service, in relation to location or exploration of deposits of mineral, oil or gas.
Section 65 (105) (zzv) of the Act Taxable service means any service provided or to be provided to any person, by any person, in relation to survey and exploration of mineral.
4. The scope of service for taxability purposes was clarified by the Board vide Circular dated 17/09/2004. Among other things, it was clarified that drilling or testing in relation to survey and exploration would fall within the ambit of this taxable service.
5. We have perused the impugned order carefully. It is noticed that the appellants entered into a contract with M/s Shiv-Vani Oil & Gas Exploration Services Ltd., which is an associate company providing various services to ONGC. As per the scope of work under the impugned contract, the appellant had agreed to provide shot hole of specified depth and quantities by using the mechanics drilling rigs provided by the main contractor and under the provisions of the said main contractor. The specification of work is elaborated in the contract and they are not in dispute. The appellants main plea is that they are not involved in any activity of survey and exploration of minerals. The term survey and exploration of minerals cannot given such a vide meaning to cover all types of activities. In this connection, we noticed that the service tax liability on similar type of work carried out by M/s Shiv-Vani Oil & Gas Exploration Services Ltd. was subject matter of decision by the Tribunal, vide final order No. 53949 of 2016 dated 05th October 2016, it was held that the services rendered are liable to service tax under the scope of the above-mentioned tax entry. The service rendered by the present appellant also is of the similar nature and following the ratio of the said decision, we uphold the service tax liability of the appellant on this activity.
6. Regarding the contention of the appellant that they have acted only as a sub-contractor and demanding service tax from them will amount to double taxation as the main contractor also is rendering similar service to ONGC, we find no legal basis for the contention of the appellant. The service tax leviable at the hands of each service provider is decided by nature of activities undertaken by them. If the same is covered by scope of the taxable entry under Finance Act, 1994 tax liability arises. The said service becomes part of final service rendered by main contractor is of no consequence to determine the tax liability of each and every service provider. If at all, the service tax paid by a sub-contractor which becomes part of service further provided by the main contractor, the scheme of credit as envisaged by the Cenvat Credit Rules, 2004 will come into play subject to fulfillment of conditions therein. It is nobodys case that the sub-contractors per-se are not liable to service tax even if they rendered taxable service. The appellants also argued that there could be no demand for extended period in view of the fact that there is no intention to evade payment of duty on the part of appellant. The appellant sought support based on the concept of Revenue neutrality to contend against demand for extended period. We note that availability or otherwise of Cenvat credit to the recipient of service by itself cannot decide the bonafideness of the appellant. We find that the Original Authority relied on the decision of Honble Supreme Court in CCE vs. Mahindra & Mahindra 2005 (179) E.L.T. 21 (S.C.), wherein Honble Supreme Court observed as below :-
4. There can be number of eventualities where extended period of limitation in terms of proviso to Section 11A may be available to the Department despite availability of Modvat credit to an assessee. The availability of Modvat credit to an assessee by itself is not conclusive or decisive consideration. It may be one of the relevant consideration. How much weight is to be attached thereto would depend upon the facts of each case.
7. Considering the above position, we find no reason to interfere with the impugned order. Accordingly the appeal is dismissed. The stay application also disposed of.
(Order pronounced in open court on 07/10/2016.) (Justice Dr. Satish Chandra) President (B. Ravichandran) Member (Technical) PK ??
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