2019 (11) TMI 1128 - HC - Service Tax

Principles of natural justice - mining services - production of oil services - Survey and Exploration - only point raised before this Court is that the Adjudicating Authority has not considered those two Circulars viz., Circular No.32/06/2018 GST and Circular No.35/2018 GST dated 12.02.2018 and 05.03.2018 respectively, which according to the petitioner are in their favour. HELD THAT - There is no dispute to the fact that as against the present order passed by the first respondent, a statutory appellate remedy is available before the CESTAT and therefore, all the factual contentions raised by the petitioner by relying on those two Circulars can very well be raised before the Appellate Tribunal, which, undoubtedly, also a fact finding authority, will have to go into the merits of the contentions raised by the petitioner and decide as to whether the Adjudicating Authority has in fact considered the effect of such Circulars while passing the impugned order or not, even though, those two Circulars were not referred to in the impugned order. When such remedy is available to the petitioner and more particularly, when this Court finds that the dispute raised in this writ petition by relying on those two Circulars cannot be considered and decide without going into the factual aspects of the matter, the petitioner has to only resort to the statutory appellate remedy by filing regular appeal before the CESTAT - this writ petition is disposed of only by granting liberty to the petitioner to file such appeal within a period of four weeks from the date of receipt of a copy of this order before CESTAT. Petition disposed off.

Summary

Issues:
Challenging order of first respondent dated 29.05.2019, seeking direction for fresh decision after personal hearing. Interpretation of service tax provisions for oil production and exploration services. Consideration of Circulars 32/06/2018 & 35/2018 - GST. Dispute over classification as a Service Provider and tax liability.

Analysis:

1. The writ petition challenges the order of the first respondent dated 29.05.2019, seeking a fresh decision after a personal hearing. The petitioner, a Public Limited Company engaged in oil and gas exploration, received a show cause notice regarding the classification of services provided and the demand for service tax for the period 2010-2015. The impugned order classified oil production and exploration services as taxable under the Finance Act, 1994, demanding significant amounts as service tax, interest, and penalty.

2. The petitioner argued that the Adjudicating Authority failed to consider Circulars 32/06/2018 & 35/2018 - GST, which favored them, before passing the order. The petitioner contended that based on these Circulars, they are not liable to pay the demanded service tax. The petitioner requested a fresh consideration based on the Circulars.

3. The counter affidavit by the first respondent stated that the Adjudicating Authority thoroughly examined the Joint Venture Agreement and Production Sharing Contract, concluding that cash calls from mining and exploration operations constituted taxable services. The Revenue's counsel argued that the Adjudicating Authority correctly determined the petitioner as a Service Provider liable for service tax, dismissing the petitioner's claims based on the Circulars.

4. The High Court analyzed the contentions of both parties and the impugned order. It noted that the Adjudicating Authority did not specifically reference the Circulars in the order but considered their effects before concluding the petitioner's tax liability. The Court emphasized that the matter of Circulars' impact on the case is a factual aspect to be reviewed by the Appellate Authority, as a statutory appellate remedy exists against the order.

5. The Court held that the petitioner should pursue the statutory appellate remedy by filing an appeal before the CESTAT within four weeks. It directed the CESTAT to consider the appeal independently and make decisions based on merits and law, without being constrained by the limitation period. The writ petition was disposed of, granting liberty to the petitioner to approach the Appellate Tribunal.