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TMI Blog2023 (12) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Shri B.L. Narasimhan and Shri Kunal Agarwal, Advocates for the appellant. Shri Radhey Tallo, Authorized Representative for the Respondent ORDER M/s. Schulmberger Aisa Services Ltd. [the appellant] has sought the quashing of the order dated 28.08.2012 passed by the Commissioner (Adjudication), Service Tax, Commissionerate, New Delhi [the Commissioner] confirming the demand of service tax with interest and penalty. 2. The issue that arises for consideration in this appeal relates to classification of activities of wireline logging and perforation during the relevant period from 14.05.2003 to 31.03.2008 under the category of 'technical testing and analysis' [TTA Services] services defined under section 65(106) of the Finance Act, 1994 [the Finance Act] and made taxable under section 65(105)(zzh) of the Finance Act. It needs to be noted that the term 'technical testing and analysis agency' has been defined under section 65(107) of the Finance Act. 3. The appellant was providing services in the exploration and production sector to M/s. Oil and Natural Gas Corporation [ONGC]. These services included the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period December, 2003 to November, 2004. A show cause notice dated 16.10.2006 was issued to the appellant by the department challenging the claims for refund. The refunds were rejected by orders dated 08.10.2007 and 05.11.2009. These orders have been challenged by the appellant before the Tribunal in Service Tax Appeal No. 172 of 2010. 8. The appellant also examined the service tax applicability and concluded that the newly introduced 'mining service' w.e.f. 01.06.2007 was comprehensive enough to cover wireline logging, perforation and other mechanical jobs provided by the appellant to ONGC and the service tax on these services paid by the appellant earlier to 01.06.2007 was not payable under category of TTA services. The appellant registered itself under the taxable category of 'mining service' and started discharging service tax on the invoices raised on ONGC w.e.f. 01.06.2007. The appellant disclosed this fact to the department and declared the service under the category of 'mining services' in the ST-3 returns. 9. On 23.10.2008, a show cause notice was issued to the appellant alleging that the appellant was providing TTA services and had not discha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lish the quality or reliability of presence or absence of something and this trial or examination, as per the dictionary meaning is 'testing'. I find that as per the conditions of the contract the assessee had to provide processed results to the Corporation. It is also the condition that if required in short period then such results are to be provided within one week. As discussed above, the activity of the assessee of collection of data, its processing with the use of sophisticated instruments is nothing but 'technical testing or analysis' service. Thus all the above said services rendered by the assessee are covered under the category of 'technical testing and analysis' service and the same is liable to service tax. ***** 35. The assessee has submitted that its services are covered under the category of 'mining services' and that the same were not covered by earlier taxable service 'technical testing and analysis service'. The assessee has also argued that creation of new entry was not made by was of bifurcation of earlier entry. As discussed in earlier para, I do not find that the activities of the assessee are covered under the ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urns of the assessee for the period subsequent to 2004 that the category of services on which service tax has been has been paid has been shown as 'Technical testing and analysis' only. The above actions of the assessee amounted to non-declaration of facts to the department, with willful intention to evade service tax, resulting in contravention of various provisions of the said Rules and thus provisions of section 73(1) of the Act are invokable. The assessee has also stated that they started payment of service tax in the category of 'Mining Services' with effect from 1-6-2007 however, there is no such details in the ST-3 returns. I find that the assessee has not only the willful intention to evade tax, but it actually evaded payment of service tax abruptly and unilaterally on its activities without seeking any clarification from the department in the category of 'Technical testing and analysis service' and wrongly showing the payment of tax in the said category in its returns. The incorrect assessment and payment of service tax by the assessee amounted to deliberate misdeclaration and suppression of facts with intent to evade tax. Thus I find that the provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 19. Section 65(105)(zzh) of the Finance Act provides that 'taxable service' means any service provided or to be provided to any person, by a technical testing and analysis agency, in relation to technical testing and analysis. 20. A perusal of section 65(106) of the Finance Act indicates that the service should be in relation to physical, chemical, biological or any other scientific testing or analysis; such service should be provided by an agency engaged in providing services of technical testing; and the object tested is either goods or materials or any immovable property. 21. The terms 'testing' and 'analysis' used in the said definition have not been defined in the Finance Act or the Central Excise Act, 1944 or the Rules made thereunder. Reference can, therefore, be made to the meanings of these terms available in the standard dictionaries/texts. TESTING Webster's Dictionary: Any trial or examination; means of trial; a criterion; a standard; means of discrimination; a group of questions or problems to be answered or solved as a gauge of ability, knowledge, or aptitude. A vessel used in refining gold and silver; a cupel. A s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Et TECHNOLOGY 5TH Edition Measure A reference sample used in comparing lengths, areas, volumes, masses and the like. The measure employed in scientific work are based on the international units of length, mass and time-the meter, the kilogram, and the second-but decimal multiples and submultiples are commonly employed. Measurement as defined in Oxford's Dictionary The action of measuring an amount, size, or extent as established by measuring a unit or system of measuring. Measurement as defined in Webster's Dictionary The action of measuring; the amount or size ascertained by measuring; the amount or size ascertained by measuring; a system of measuring. 26. Measure is defined in the dictionaries in the following manner: MEASURE In Oxford's Dictionary (1) Ascertain the size, amount, or degree of (something) by comparison with a standard unit or with an object of known size be of (a specified size or degree) (measure something out) take an exact quantity of something assess the extent, quality, value or effect of (measure up) reach the required or expected standard. Means of achieving a purpose : cost cutting measures a legislati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing. 30. What, therefore, transpires is 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. 31. The appellant has also placed reliance on the literature provided in respect of 'well-logging' and 'perforation' activities in the Dictionary of Petroleum Exploration, Drilling, Production by Norman J. Hyne to submit that logging and perforation activity undertaken by the appellant is not towards any testing or analysis: Well Logging 1. Log 1) a record of rock properties in a well, usually made by a geologist or a service company. Some types of logs are sample, mud, drilling time, and wireline 2) a curve or set of curves or symbols that records the physical, electrical, radioactive, and/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bar. 3. Perforations or perforation tunnels Holes shot in the casing or liner, cement, and producing formation by bullets or shaped-explosive charges to allow oil and/gas from a producing zone to flow into the well 32. It would be seen from the above technical literature that well logging is the process of recording measurements of various properties of rock and fluid at various depths in a well, and nothing more. It is also clear that perforation is a purely mechanical activity whereby holes/perforations are shot in the casing or liners. 33. It can, therefore, 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'. 34. The learned counsel for the appellant has contended that wireline logging, perforation and other mechanical jobs undertaken by the appellant would fall under the taxable category of 'mining servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d vs. Commissioner of Customs and Central Excise, Hyderabad - 2009 (13) STR 42 (Tri.-Bang.). The appellant therein was also engaged in the activity of beneficiation of coal on behalf of the KPCL. The adjudicating authority classified the said activity under BAS services. The Division Bench of the Tribunal observed that the said activity would be covered under mining services with effect from 01.06.2007 and service tax could not be levied under BAS for any period prior to 01.06.2007. The relevant portion of the order of the Division Bench is reproduced below:- 14. On going through the contract with the KPCL, we are satisfied that the dominant activity of the appellant is beneficiation/washing of coal . The appellant has been associated in the meeting of expert Committee (Thermal and coal mining) held on 19th and 20th December, 2000 on coal mining projects. The Coal Mines (Nationalisation) Act, 1973 defines under Section 2(h) 'Mine' 'Mine' means any excavation where any operation for the purpose of searching for or obtaining minerals has been or is being carried on, and includes (i) all borings and bore holes; (ii) all shafts, whether in the course of being sunk ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at all be liable to service tax for a period prior to 1-6-2007. In view of this, we are not going into the valuation of the service liable to service tax. In fine, the impugned order cannot be sustained. Hence, we allow the appeal with consequential relief. (Emphasis Supplied) 40. The Division Benches of the Tribunal in M/s. Aryan Coal Beneficiations Pvt. Ltd. vs. Commissioner of Service Tax, New Delhi 2012 (9) TMI 205-CESTAT, New Delhi and M/s. Spectrum Coal and Power Ltd. vs. Commissioner of Central Excise, Raipur 2012-TIOL-1125-CESTAT-DEL took the same view after following the decision of the Tribunal in Aryan Energy. 41. In this connection, it will also be pertinent to refer to the decision of the Bombay High Court in Indian National Shipowners'. 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. The relevant portion of the judgment of the Bombay High Court is reproduced below:- 37. Entry (zzz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14. ***** The definition of 'CE' services as it stood prior to 16 July, 2001 was not amended when a new service namely, 'STC' was inserted on 16 July, 2001. It cannot, therefore, be alleged that 'STC' service had been carved out from 'CE' Services. In fact, the definition of 'CE' services continued to remain the same, till it was amended in 2006. Thus, the Show Cause Notice proceeded on an incorrect premise that even prior to 16 July 2001, the nature of service provided in 'STC' services was the same as 'CE' Services. 43. The same view was taken by the Tribunal in M/s Hal Offshore Ltd. vs. Commissioner of Service Tax, Delhi - 2018 (3) TMI 1384 - CESTAT NEW DELHI wherein it was observed that:- 9. ***** The same service cannot be taxed under two different tax entry for different periods. Admittedly, the taxing scope of business support service did not undergo in the statue by change or amendment during the material time. A new service tax entry for supply of tangible goods was introduced w.e.f. 16/05/2008. It is not the case of the Revenue that the said tax entry is not applicable to the appellant. The only conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Return for Half Year ending September 30, 2004 We are enclosing herewith our service tax return for the Half Year ending September 30, 2004 relating to the following taxable service categories: Technical testing and analysis service; Commissioning or installation service; and Maintenance or repair Service Please be informed that our customer M/S Oil and Natural Gas Corporation, has brought to our knowledge that as per an opinion received by them from an eminent legal expert, Wire line Logging Services do not fall within the ambit of the term Technical Testing and Analysis. The conclusion arrived at has therefore given rise to an ambiguity with respect to taxability of Wire line Logging and similar services under the category of Technical Testing and Analysis. We have accordingly not recovered/deposited service tax with respect to contracts with ONGC, Offshore Service Group, Mumbai Region for the period under return. A copy of the opinion and correspondence from ONGC in this regard is attached as Annexure 1 2 respectively. However to the extent service tax has been recovered from the clients, the same has been duly deposited. To establish our bonafide, we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order to appreciate this contention it would appropriate to reproduce section 73 of the Finance Act as it stood at the relevant time. This section deals with recovery of service tax not levied or paid or short levied or short paid or erroneously refunded. It is as follows; 73.(1) Where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the Central Excise Officer may, within one year from the relevant date, serve notice on the person chargeable with the service tax which has not been levied or paid or which has been short-levied or short-paid or the person to whom such tax refund has erroneously been made, requiring him to show cause why he should not pay the amount specified in the notice: PROVIDED that where any service tax has not been levied or paid or has been short-levied or short-paid or erroneously refunded by reason of- (a) fraud; or (b) collusion; or (c) wilful mis-statement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Chapter or of the rules made thereunder with intent to evade payment of service tax, by the person chargeable with the service tax o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r erroneously refunded, by the reason of- (a) fraud; or (b) collusion; or (c) any wilful misstatement; or (d) suppression of facts; or (e) contravention of any of the provisions of this Act of the rules made thereunder with intent to evade payment of duty, by any person chargeable with the duty, the Central Excise Officer shall, within five years from the relevant dated, serve notice on such person requiring him to show cause why he should not pay the amount specified in the notice along with interest payable thereon under Section 11AA and a penalty equivalent to the duty specified in the notice. 58. In Pushpam Pharmaceuticals Company, 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 mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es the omission by one to do what he might have done and not that he must have done, does not render it suppression. 27. Relying on the aforesaid observations of this Court in the case of Pushpam Pharmaceutical Co. v. Collector of Central Excise, Bombay [1995 Suppl. (3) SCC 462], we find that suppression of facts can have only one meaning that the correct information was not disclosed deliberately to evade payment of duty. When facts were known to both the parties, the omission by one to do what he might have done not that he must have done would not render it suppression. It is settled law that mere failure to declare does not amount to willful suppression. There must be some positive act from the side of the assessee to find willful suppression. Therefore, in view of our findings made herein above that there was no deliberate intention on the part of the appellant not to disclose the correct information or to evade payment of duty, it was not open to the Central Excise Officer to proceed to recover duties in the manner indicated in proviso to Section 11A of the Act. (Emphasis Supplied) 60. These two decisions in Pushpam Pharmaceuticals and Anand Nishikawa Company L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) does not refer to a scenario where there is a mere omission or mere failure to pay duty or take out a license without the presence of such intention. ***** The Revenue has not been able to prove an intention on the part of the Appellant to avoid tax by suppression of mention facts. In fact it is clear that the Appellant did not have any such intention and was acting under a bonafide belief. [Emphasis Supplied] 63. It would also be useful to refer to a decision of the Tribunal in Shiv-Vani Oil Gas Exploration Services Ltd. vs. C. S. T., New Delhi 2017 (47) STR 200 (Tri-Del.) , wherein the Tribunal after making reference to the decision of the Supreme Court in Cosmic Dye Chemical vs. CCE, Bombay 1995 (75) E.L.T. 721 (SC) , observed that there should be an intent to evade payment of service tax if the extended period of limitation has to be invoked. The observations are as follows: 8. Regarding the demand for extended period, we find the reason given by the Original Authority is not legally sustainable. In fact he recorded that in terms of proviso to Section 73 of Finance Act, 1994, the intention to evade payment of duty is not required to invoke extende ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the contrary, the statements of the officials of MTNL, relied upon by the respondents, clearly indicate that they were under the belief that the receipt of compensation/financial support from the Government of India was not taxable. Absent any intention to evade tax, which may be evident from any material on record or from the conduct of an assessee, the extended period of limitation under the proviso to Section 73(1)of the Act is not applicable . The facts of the present case indicate that MTNL had made the receipt of compensation public by reflecting it in its final accounts as income. As stated above, merely because MTNL had not declared the receipt of compensation as payment for taxable service does not establish that it had willfully suppressed any material fact. MTNL's contention that the receipt is not taxable under the Act is a substantial one. No intent to evade tax can be inferred by non-disclosure of the receipt in the service tax return. (Emphasis Supplied) 65. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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