2020 (11) TMI 461 - AT - Service Tax

Classification of services - Maintenance and Repair service or otherwise - Charter hire of workover rigs - Extended period of limitation - HELD THAT - The scope of work has been stated in Annexure III appearing on page No. 85 of the appeal book, which inter alia states that, contractor shall be required to start work over, and if required, complete the development / exploratory wells for ONGC by deploying its mobile work over unit at such locations within the operating area as may be identified by ONGC, and to such depth as are designated by ONGC to exploit natural hydrocarbon in the form of oil gas . Thereafter, in subsequent paragraph, it has been stated that other specified jobs shall also be carried out during the said work over operations, which are not limited to what has been expressly stated therein. The learned Commissioner, in page No. 7 8 of the impugned order, after having noted that aforesaid scope of work, has hurriedly concluded that the work is nothing but maintenance and repair of workover oil wells. No basis whatsoever has been assigned. He completely lost sight that the workover job has been desired by ONGC to complete the development and exploratory wells by deploying the mobile workover units at locations identified by ONGC to exploit natural hydrocarbons. On perusal of the above scope of work, we are not inclined to accept the conclusion reached by the learned Commissioner to hold that the service rendered by the assessee is for repair or maintenance. We agree with the submissions made by the learned Advocate that no repair or maintenance service has been rendered by the assessee and whatever repair service has been undertaken is clearly incidental to the main service of hiring of workover rigs. The said service could not be taxed under the category of Maintenance, Management and Repair service'. Extended Period of Limitation - HELD THAT - The learned Commissioner has not assigned any positive evidence to show that Service Tax has been deliberately not paid by the assessee. The only finding that has been made by the learned Commissioner is that the assessee has not intimated the fact of rendering the said service, which in view of the department is taxable under Maintenance, Management and Repair service . On the basis of said findings, the extended period of limitation has been invoked, which in our view is also not proper and would not meet the test of law, more so in view of the fact that issue pertained to interpretation of taxability - the demand confirmed by invoking the extended period of limitation fails. The impugned demand of Service Tax and interest are set aside and the appeal filed by assessee is allowed.

Summary

Issues:
1. Appeal against de novo Order confirming Service Tax demand under 'Maintenance and Repair service' category.
2. Maintainability of Department's appeal before the Tribunal.
3. Classification of service under 'Maintenance, Management & Repair Service'.
4. Compliance with remand instructions and principles of natural justice.
5. Justification of demand under the extended period of limitation.

Issue 1:
The judgment deals with an appeal against an Order confirming a Service Tax demand under the 'Maintenance and Repair service' category for the period July 2003 to March 2006. The Department refrained from passing any order on the penalty due to a pending appeal before the High Court regarding the penalty dropped in a previous adjudication order.

Issue 2:
The Tribunal rejected the Department's appeal due to jurisdictional issues related to the Review Committee. The assessee's appeal was allowed by remand for a reasoned order with adequate opportunity for representation.

Issue 3:
The primary issue was the classification of services provided by the appellant to ONGC under 'Maintenance, Management & Repair service'. The Tribunal analyzed the contract details and scope of work, concluding that the services were for 'Charter hire of workover rigs' and not repair or maintenance services. The Tribunal found that the demand under the 'Maintenance, Management and Repair service' category was not justified and set it aside.

Issue 4:
The appellant challenged the impugned order on grounds of violation of natural justice and non-compliance with remand instructions. The Tribunal agreed that the Commissioner failed to provide documents and adequate opportunity for representation, violating principles of natural justice.

Issue 5:
Regarding the invocation of the extended period of limitation, the Tribunal found that the Commissioner did not provide positive evidence of willful tax evasion by the assessee. The demand confirmed under the extended period of limitation was deemed improper, especially considering the issue pertained to the interpretation of taxability.

In conclusion, the Tribunal set aside the Service Tax demand and interest, allowing the appeal filed by the assessee and rejecting the Department's appeal. The judgment highlighted the importance of proper classification of services, adherence to principles of natural justice, and the necessity of positive evidence for invoking the extended period of limitation in tax matters.