2014 (10) TMI 167 - AT - Service Tax

Denial of refund claim - Consulting Engineer Service - Unjust enrichment - Bar of limitation - Held that - Activity undertaken by HOSI is in nature of executing the job. HOSI is not providing any technical assistance or consultancy service to ONGC as they are not analyzing any data collected by them. Their mere job is to provide data on hard copy to ONGC for their consideration. In these circumstances, the HOSI is neither providing any consultancy or technical assistance. Further, we find that HOSI is neither a professionally qualified engineer nor they are an engineering firm during the relevant time as per the definition of Consulting Engineer under Section 65(31) of the Finance Act, 1994. By Merely employing an engineer, it does not become an engineering firm. Therefore, on merits, we hold that the activity undertaken by the HOSI do not qualify under the category of Consulting Engineer Service. Therefore, HOSI is not required to pay service tax in this case - matter remanded back - Decided in favour of assessee.

Summary

Issues involved:
- Maintainability of appeal by ONGC before CESTAT Mumbai
- Nature of services provided by HOSI to ONGC
- Eligibility of HOSI for refund claim of service tax
- Bar of unjust enrichment and limitation for filing refund claim

Issue 1: Maintainability of appeal by ONGC before CESTAT Mumbai
The issue raised was regarding the maintainability of the appeal filed by ONGC before the CESTAT Mumbai. The learned A.R. objected to ONGC's appeal, stating that as no show-cause notice was issued to ONGC and ONGC was not part of the adjudication process, the appeal was not maintainable. However, the Tribunal held that since the impugned order was served on ONGC and ONGC sought to participate in the proceedings, the appeal filed by ONGC was deemed maintainable before the Tribunal.

Issue 2: Nature of services provided by HOSI to ONGC
The dispute centered around the nature of services provided by HOSI to ONGC under the category of Consulting Engineer Service. HOSI provided equipment, tools, and manpower for sub-surface data measurement, data recording, and logging while drilling. The technical analysis and interpretation of the data were done by ONGC, not HOSI. The Tribunal determined that HOSI's activities did not qualify as Consulting Engineer Service as they were primarily executing the job and providing data on hard copy to ONGC. It was concluded that HOSI was not required to pay service tax under this category.

Issue 3: Eligibility of HOSI for refund claim of service tax
HOSI had initially paid the service tax on the activity, which was later found to be not qualifying as Consulting Engineer Service. Upon ONGC's advice, the service tax paid was recovered from HOSI, leading to a refund claim by HOSI for the period from May 2003 to October 2003. The adjudicating authority denied the refund claim, stating that HOSI had rightly paid the service tax. However, the Tribunal found that the lower authorities had not considered the issues of limitation and unjust enrichment. Therefore, the Tribunal set aside the impugned order and allowed the appeals by way of remand for further examination on these issues.

Issue 4: Bar of unjust enrichment and limitation for filing refund claim
The Revenue argued that HOSI correctly paid the service tax as they were providing consultancy and technical assistance to ONGC. They contended that the refund claim was barred by limitation under Section 11B of the Central Excise Act, 1944, and the bar of unjust enrichment applied. The Tribunal disagreed, stating that HOSI's activities did not qualify as Consulting Engineer Service. The Tribunal directed the adjudicating authority to examine the issues of limitation and unjust enrichment, providing a fair chance to both appellants before deciding the case.

In conclusion, the Tribunal found that HOSI's activities did not fall under the category of Consulting Engineer Service and allowed the appeals by way of remand for further examination on the issues of limitation and unjust enrichment.