2014 (3) TMI 266 - AT - Service Tax

Classification of service - Consulting Engineer s Service or Survey and Exploration of Minerals Service - Held that - 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 be demanded on the same activity under a different category for the prior period. For the period prior to Budget 2004, the activity undertaken by the respondents cannot be classified as Consulting Engineer s Service especially when Survey and Exploration of Minerals Service has not been carved out of Consulting Engineer s Service - Decided against Revenue.

Summary

Issues:
Classification of services under 'Consulting Engineer's Service' or 'Survey and Exploration of Minerals' for the period prior to Budget 2004.

Analysis:
The judgment involves two appeals arising from Order-in-Original Nos. 2 & 3/ST/SJS/2006 passed by the Commissioner of Service Tax, Mumbai. The appellants, M/s. Fugro Geonics Pvt. Ltd. and M/s. Elcome Surveys Pvt. Ltd., provided survey services for clients engaged in oil exploration. The Revenue contended that the services should be classified under 'Consulting Engineer's Service' and demanded service tax. However, the Commissioner concluded that the services were classifiable under 'Survey and Exploration of Minerals' as per the Finance Act, 1994, which came into force in 2004. Therefore, no service tax demand would accrue on the respondents for the period prior to that. The Revenue challenged this decision before the Appellate Tribunal.

The grounds of appeal by the Revenue were based on the Memorandum of Articles of Association of the respondent-firms, which mentioned providing consultancy services. The Revenue argued that the services rendered should be classified under 'Consulting Engineer's Service'. The Additional Commissioner representing the Revenue reiterated these grounds during the proceedings.

Upon considering the submissions and records, the Tribunal noted that the respondents conducted various surveys related to oil exploratory operations for clients, generating data that was passed on to them. The Tribunal highlighted that the survey reports submitted did not involve advice or consultancy but presented factual data about the sea-bed features. The Tribunal referenced the definitions of 'Survey and Exploration of Minerals' under the Finance Act, 1994, and emphasized that activities falling under a specific entry introduced later could not be taxed under a different category for the prior period. Citing relevant precedents, the Tribunal concluded that the services provided by the respondents should be classified under 'Survey and Exploration of Minerals' for the period before Budget 2004.

In light of the above analysis, the Tribunal found no merit in the appeals filed by the Revenue and consequently dismissed them. The judgment highlighted the importance of correctly classifying services under the appropriate categories as defined by the law, ensuring compliance with taxation regulations and principles.

Judgment:
The Appellate Tribunal CESTAT MUMBAI upheld the decision of the Commissioner, classifying the services provided by M/s. Fugro Geonics Pvt. Ltd. and M/s. Elcome Surveys Pvt. Ltd. under 'Survey and Exploration of Minerals' for the period prior to Budget 2004, thereby dismissing the appeals filed by the Revenue.