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2023 (12) TMI 848 - AT - Service TaxClassification of activities of wireline logging and perforation during the relevant period from 14.05.2003 to 31.03.2008 - technical testing and analysis services or not - whether the term 'technical testing and analysis agency' has been defined under section 65(107) of the Finance Act? HELD THAT - The activities undertaken by the appellant do not involve testing or analysis. It is the data procured by the appellant that is communicated to ONGC which, thereafter, independently analyses the same for determining the course of action. The function required to be performed by the appellant is strictly limited to the scope of measuring different parameters related to the oil rigs, and additionally, perforation, which has no relation to testing and analysis services - It can safely be concluded that the appellant was responsible for mobilizing equipment necessary for conducting the measurement/logging activities at the site and undertake perforation of the oil rigs casings. These activities do not involve any testing or analysis and accordingly, cannot be classified under 'technical testing and analysis service'. Whether the activity carried out by the appellant would fall under TTA services prior to 01.06.2007? - HELD THAT - It will be pertinent to refer to the decision of the Bombay High Court in INDIAN NATIONAL SHIPOWNERS' ASSOCIATION VERSUS UNION OF INDIA 2009 (3) TMI 29 - BOMBAY HIGH COURT . It was held that introduction of a new entry and inclusion of certain services in that entry would presuppose that there was no earlier entry covering the said services. It was also observed that creation of the new entry was not by way of amending the earlier entry and it was not carved out of any earlier entry - In the instant case, the definition of TTA did not undergo any change when a new service 'in relation to mining' was introduced w.e.f. 01.06.2007. The department admits that w.e.f. 01.06.2007, the activity carried out by the appellant is covered under the category of service in relation to mining. This activity could not, therefore, have been categorized under TTA service prior to 01.06.2007 - As it has been found that the activity undertaken by the appellant w.e.f. 01.06.2007 pertains to mining services as made taxable under section 65(105)(zzzy) of the Finance Act, service tax under TTA services cannot be charged from the appellant prior to 01.06.2007. It also transpires from the records that the appellant had filed refund applications in 2005 since the appellant was not required to deposit service tax under the TTA services. The returns filed by the appellant from 2004 onwards show that the appellant has consistently informed the department that the services performed by the appellant would not fall under the TTA services. Whether the Commissioner was justified in holding that the extended period of limitation contemplated under section 73(1) of the Finance Act was correctly invoked in the facts and circumstances of the case? - HELD THAT - In PUSHPAM PHARMACEUTICALS COMPANY VERSUS COLLECTOR OF C. EX., BOMBAY 1995 (3) TMI 100 - SUPREME COURT , the Supreme Court examined whether the Department was justified in initiating proceedings for short levy after the expiry of the normal period of six months by invoking the proviso to section 11A of the Excise Act. The proviso to section 11A of the Excise Act carved out an exception to the provisions that permitted the Department to reopen proceedings if the levy was short within six months of the relevant date and permitted the Authority to exercise this power within five years from the relevant date under the circumstances mentioned in the proviso, one of which was suppression of facts. The records indicate that the appellant had repeatedly informed the department from 23.12.2004 that prior to 01.06.2007 it had not been discharging service tax on wireline logging, perforation and data processing services under the category of TTA services and by a letter dated 25.10.2007 the appellant had also informed the department that it had started paying service tax on mining services when it was introduced for the first time w.e.f. 01.06.2007. Yet, the show cause notice was issued to the appellant only on 23.10.2008. Thus, the extended period of limitation could not have been invoked in the facts and circumstances of the case. The impugned order passed by the Commissioner cannot be sustained and is set aside - Appeal allowed.
Issues Involved:
1. Classification of wireline logging and perforation services. 2. Applicability of service tax under TTA services. 3. Invocation of the extended period of limitation. Summary: 1. Classification of Wireline Logging and Perforation Services: The appellant, M/s. Schulmberger Aisa Services Ltd., provided services in the exploration and production sector, including wireline logging, perforation, and other mechanical jobs. The primary contention was whether these activities should be classified under 'technical testing and analysis' (TTA) services as defined under section 65(106) of the Finance Act, 1994. The Tribunal examined the nature of the services provided, which involved gathering measurements of underground rock formations and creating holes in casings using explosives. It was determined that these activities did not constitute 'testing' or 'analysis' but rather involved measurement and mechanical operations. Consequently, the Tribunal concluded that these services could not be classified under TTA services. 2. Applicability of Service Tax under TTA Services: The appellant initially registered under TTA services and paid service tax but stopped after being informed by ONGC that wireline logging services were not covered under TTA services. The appellant believed that the newly introduced 'mining service' from 01.06.2007 was comprehensive enough to cover their activities. The Tribunal agreed, stating that the activities of wireline logging, perforation, and other mechanical jobs were integrally connected with the mining of oil or gas and thus fell under 'mining service' from 01.06.2007. The Tribunal referenced several decisions, including Aryan Energy and Indian National Shipowners' Association, to support the view that the introduction of a new service entry presupposes that there was no earlier entry covering the said services. 3. Invocation of the Extended Period of Limitation: The Commissioner invoked the extended period of limitation under section 73(1) of the Finance Act, alleging willful suppression of facts by the appellant. The Tribunal, however, found that the appellant had repeatedly informed the department about their service tax positions and had been paying service tax under 'mining services' from 01.06.2007. The Tribunal referred to several Supreme Court and High Court decisions, including Pushpam Pharmaceuticals and Bharat Hotels Limited, which held that suppression of facts must be deliberate and with an intent to evade payment of duty. The Tribunal concluded that the extended period of limitation could not be invoked as the appellant had acted in good faith and disclosed relevant information to the department. Conclusion: The Tribunal set aside the impugned order dated 28.08.2012, confirming the demand with interest and penalty, and allowed the appeal, concluding that the appellant's activities were not covered under TTA services and that the extended period of limitation was not justifiably invoked.
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