2015 (1) TMI 388 - AT - Service Tax

Classification of service - Scientific or technical consultancy service or Survey and exploration of mineral - penalties under Sections 76, 77 and 78 - Held that - keeping in mind the activities undertaken by the appellant, the service is classifiable under the Survey and Exploration of Mineral Service - The definition of this taxable service is a service provided by a Scientist or a Technocrat or any Scientific or Technical Institution or Organization. It is clear that the appellants are not a Scientific & Technical Institution or Organization. If we were to accept otherwise, every company which undertakes technical consultancy as many companies do will fall under this definition, which is obviously not correct. Therefore, we hold that the activity undertaken by the appellant is covered under the Survey and Exploration of Mineral services for the entire period. Whether any service has been provided by the appellant for consideration - Held that - when the activity is undertaken by them on the basis of 100% grant received from the Government and the grant is totally expended on the expenses involved under various activities as reflected in the balance sheet, it cannot be said that any service has been provided. For any service, there has to be a service provider, a service receiver and consideration. In the present case, the records show that no consideration has been paid by the Government to the appellant for undertaking the work of Survey and Exploration of Mineral and preparation of the detailed reports thereof. What has been received from the Government is only the reimbursement of the actual expenses involved. - there has been no service provided by the appellant to the Ministry of Mines. - Decided in favour of assessee.

Summary

Issues:
Appeal against demand of Service Tax confirmed under Sections 76, 77, and 78 of the Finance Act, 1994 for exploration activities conducted by a Public Sector Undertaking (PSU) unit owned by the Government of India.

Analysis:

Issue 1: Classification of Service Provided
The central question was whether the service provided by the appellant fell under Scientific and Technical Consultancy Services or Survey and Exploration of Mineral Service. The Tribunal determined that the appellant's activities were more aligned with Survey and Exploration of Mineral Service. The definition of Scientific or Technical Consultancy Service did not apply as the appellant was not a Scientific & Technical Institution or Organization. Hence, the activity was classified under Survey and Exploration of Mineral services for the entire period.

Issue 2: Consideration for Services Provided
The Tribunal analyzed whether any service had been provided by the appellant for consideration. It was argued that since the appellant's activities were based on 100% grant received from the Government, no consideration was involved. The records indicated that the Government only reimbursed the actual expenses incurred by the appellant. The Tribunal found that no consideration had been paid by the Government for the Survey and Exploration of Mineral work. The absence of consultation fees received by the appellant further supported the conclusion that no service had been provided to the Ministry of Mines.

Final Decision
After considering the arguments and evidence presented, the Tribunal concluded that no service had been provided by the appellant to the Ministry of Mines. Therefore, the demands for Service Tax were set aside, and the appeals were allowed with consequential relief. The Tribunal did not address the issues of cum-duty payment, time limitation, and penalties as the main matter was decided on its merits.

This detailed analysis highlights the Tribunal's reasoning behind the classification of services provided by the appellant and the absence of consideration for those services, leading to the favorable decision in the appeal against the demand of Service Tax.