2019 (3) TMI 1429 - AT - Service Tax

Refund of service tax paid wrongly - Classification of services - mining services - service tax paid erroneously for the period 01.06.2007 to 15.05.2008 - supply of tangible goods service - Revenue have argued that the activity carried out by Aban was not merely post-production activity and that the same would require to be brought under the fold of mining service and that service tax was therefore correctly paid by Aban - time limitation - Held that - The expert opinion had been produced by the respondent from independent sources, namely, from three Professors of the Indian School of Mines, Department of Petroleum Engineering, Dhanbad, wherein inter alia, it had been opined that the impugned floating production system is not capable of carrying out any drilling or work-over operations; that they are exclusively used only for post-production operations; therefore activity of the contractor is only post-mining. In the Grounds of Appeal, the Revenue have contended that the said technical opinion is not acceptable and that the activity cannot be called post-production activity. However, no evidence or technical reasoning has been put forth by Revenue to support their non-acceptance of the expert opinion produced by the respondent. Nor has the department come forth with any counter expert opinion from another independent and credible authority. Indubitably, the Indian School of Mines, Dhanbad is a National Institute of repute, and, independent opinion given by the three Professors of the Department of Petroleum Engineering of that Institute deserves to be given respect and credibility, unless that opinion is contradicted by another expert authority of equal standing, which is not the case here - there is no infirmity in the LAA accepting the expert opinion submitted by the respondent to assist in his conclusions that the activity of supply of floating rigs by Aban would be covered under the category of supply of tangible goods service and that therefore there is no liability to pay service tax for the said supply of floating rigs during the disputed period. The certificates issued by Aban and by CPCL as also the agreement between CPCL and the respondent, the invoices issued by respondents to CPCL, which have been submitted by the Ld. Counsel in the course of arguments all serve to indicate that unjust enrichment is not applicable in the instant case and that price fixation is beyond the control of respondent and further that the invoices raised by respondents to CPCL do not contain any element of service tax nor whether any separate invoices raised for services tax. This being so, no infirmity is found in the same conclusions arrived at by LAA in para 6.1 of the impugned order. Once the activity is found to be falling within the fold of supply of tangible goods service, the consequential finding would only be that said tax was collected without authority of law - the Ld. counsel for respondent is correct in his assertion on the case laws relied upon by him to argue that limitation period of one year is not applicable in the present case. Appeal dismissed - decided against Revenue.

Issues Involved:

1. Classification of services provided by Aban Offshore Ltd.
2. Applicability of the Bombay High Court judgment in the INSA case.
3. Time-bar under Section 11B of the Central Excise Act, 1944.
4. Production of documentary evidence regarding the incidence of duty.
5. Requirement of a disclaimer certificate from Aban Offshore Ltd.
6. Applicability of the doctrine of unjust enrichment.
7. Relevance of expert opinion in determining the nature of services.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by Aban Offshore Ltd.:
The respondents entered into a production sharing contract and engaged Aban Offshore Ltd. for the supply and operation of a 'Floating Rig.' Aban charged service tax under "mining service." The respondents claimed a refund, asserting that the service tax was erroneously paid under "mining service" instead of "supply of tangible goods service," which became taxable only from 16.5.2008. The original authority rejected the refund claim, but the Commissioner (Appeals) allowed it, concluding that the supply of floating rigs fell under "supply of tangible goods service" and not "mining service."

2. Applicability of the Bombay High Court Judgment in the INSA Case:
The respondents relied on the Bombay High Court judgment in the INSA case, which held that the supply of rigs falls under "supply of tangible goods service." The original authority rejected this reliance, noting that the department had filed an SLP in the Supreme Court against the INSA judgment. However, the Commissioner (Appeals) accepted the INSA judgment, which was affirmed by the Supreme Court, thereby supporting the respondents' claim.

3. Time-bar Under Section 11B of the Central Excise Act, 1944:
The original authority rejected part of the refund claim as time-barred under Section 11B. The respondents argued that the tax was paid under a misinterpretation of law and hence collected without authority. The Commissioner (Appeals) and the Tribunal noted that in cases of tax paid under mistake of law, the limitation period under Section 11B does not apply, as supported by various High Court judgments.

4. Production of Documentary Evidence Regarding the Incidence of Duty:
The original authority held that the respondents failed to produce sufficient documentary evidence to prove that the tax burden was not passed on to customers. However, the respondents provided certificates from CPCL and Aban, as well as agreements and invoices, indicating that the tax incidence was not passed on. The Commissioner (Appeals) accepted this evidence, and the Tribunal found no infirmity in this conclusion.

5. Requirement of a Disclaimer Certificate from Aban Offshore Ltd.:
The original authority noted the absence of a disclaimer certificate from Aban Offshore Ltd. The respondents later produced a certificate from Aban confirming that they had collected the service tax from the respondents and had no objection to the refund being granted. The Tribunal found this certificate sufficient to address the requirement.

6. Applicability of the Doctrine of Unjust Enrichment:
The original authority applied the doctrine of unjust enrichment, but the Commissioner (Appeals) and the Tribunal concluded that the respondents had provided sufficient evidence to show that the tax burden was not passed on to CPCL. The Tribunal referred to various judgments that supported the respondents' position on unjust enrichment.

7. Relevance of Expert Opinion in Determining the Nature of Services:
The respondents provided an expert opinion from the Indian School of Mines, Dhanbad, stating that the floating production system was used exclusively for post-production operations and not for mining. The Tribunal accepted this expert opinion, noting that the Revenue did not provide any counter-expert opinion. The Tribunal emphasized that expert opinions from credible sources should be given due respect unless contradicted by another expert authority.

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s order, concluding that the supply of floating rigs by Aban fell under "supply of tangible goods service" and not "mining service." The Tribunal also held that the refund claim was not time-barred, the doctrine of unjust enrichment did not apply, and the respondents had provided sufficient documentary evidence. The appeal filed by the department was dismissed.

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