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TMI Blog2025 (1) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... satisfy the definition of consulting engineer service as per section 65(31) which was a taxable for providing service as defined under section 65(105) [(g) of the Finance Act 1994. In CIT Vs Bharti Cellular Ltd. [ 2008 (10) TMI 321 - DELHI HIGH COURT ], the Hon ble High Court of Delhi has observed that the word consultant is a derivative of the word consult which entails deliberations, consideration, conferring with someone, conferring about or upon a matter. Hence it is seen that what is envisaged from a consultant is merely the provision of advisory services and not the actual performance of the operation function. The 28 personnel provided by HAES for the Project include Rig/ Project Manager, Rig Superintendent, Night Tour Pusher, Driller, Assistant Driller, Chief Mechanic, Chief Electrician, Safety Officer, Medic, welder, Electrician helper, Mechanic helper, Roustabout, Crew bus Driver, Fork lift operator and Crane operator. They are hardly the type of persons who can be expected to advice or provide consultancy or technical assistance. In Basti Sugar Mills Co. Ltd. vs. CCE Allahabad [ 2007 (4) TMI 25 - CESTAT,NEW DELHI ] the Tribunal held that the role of a consultant is to re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ross amount paid to HAES. In order to verify their claim of appropriate payment of service tax, the Vendor Open Transaction Report of HAES was obtained from Niko and reconciled with the value of service tax paid as declared in ST-3 returns. It appeared that Niko had failed to pay service tax on the value of mobilization charges, diesel reimbursement charges, cost of rig move etc. amounting to Rs.5,46,29,417/- and value of service tax not paid worked out to Rs.67,52,196/- including cess. Accordingly, Show Cause Notice cum demand notice dated 18.04.2012 was issued to Niko, invoking the extended period. After due process of law, the Ld. Adjudicating Authority confirmed the demand of service tax as per sec. 65(105)(g) of FA1944, as Consulting Engineer Service along with interest and imposed penalty under section 78 and 77(2) of the Finance Act, 1994 inasmuch as the appellant did not file the ST-3 returns with all the relevant details for the said period. Against this order, the appellant has preferred this present appeal. 3. Shri Vishal Agrawal, Ld. Advocate appeared for the appellant and Shri M. Selvakumar, Ld. Authorized Representative appeared for the respondent. 3.1 The Ld. Advocat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asons have been laid down for the invocation of the extended period of limitation and imposition of equivalent penalty under Section 78 of the Finance Act, 1994. In light of the above, the Ld. Counsel prayed that the appeal be allowed and the demands raised along with interest and penalty be quashed in toto. 3.2 The learned AR took us through the OIO. He mainly relied on the paragraphs reproduced below, to high light the issue involved and to state revenue s view on the matter; 6.1 On perusal of the documents furnished by NIKO along with the written reply, it is seen that HAES has confirmed its agreement to provide the Drilling Unit 250K CDWS for NIKO for its exploration activities of Cauvery Block in India The compensation schedule lists the rates and charges such as Mobilization charges, Rig operating rate day rate, Rig standby day rate with crew, Rig standby without crew, Camp charges, demobilisation charges, etc. All other terms and conditions of the Master Day Work Contract HA- 0607-001 dated 29th August 2006 executed between HAES and TIC Energy (Thailand) Corporation Co Ltd and subsequent amendments/addendums/variation orders be applicable for Cauvery Block operations. From t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5) [(g) defines taxable service as any service provided or to be provided to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering. CBEC vide Circular No.B43/5/97-TRU dated 2.7.97 has clarified the scope of Consulting engineer' service , wherein the scope of the service is defined as under: 4.3...... The scope of the services of a consultant may include any one or more of the following categories: (i) Feasibility study. (ii) Pre-design services/project. (iii) Basic design engineering. (iv) Detailed design engineering. (v) Procurement. (vi) Construction supervision project management. (vii) Supervision of commissioning and initial operation. (viii) Manpower planning and training. (ix) Post-operation and management. (x) Trouble shooting and technical services, including establishing systems and procedures for an existing plant. Though the above list is not exhaustive, it illustrates the wide scope and nature of the services rendered by a consulting engineer. From the above statutory provisions, it is evident that services rend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e transfer of goods for use for a specific period for lease/hire charges without transfer of possession and effective control of the goods to the transferee/lessee amounts to service covered under 'Supply of Tangible service' 6.4 In the case at hand, HAES has executed a contract for providing Drilling Rig Services' and not for simple hiring of the Rig. The services received by NIKO includes operating the rig with the personnel of HAES, providing project management, providing campsite, man- power planning etc., The Production Sharing Contract' entered with the Government by NIKO is in the pursuit to explore the presence of Hydrocarbons capable of mining and exploration of oil and natural gas and the services received from HAES is more akin to technical assistance in the pursuit of finding Hydrocarbon and not a case of mere hiring of rigs. *****. *****. ***** 6.8 Once, it is evident that apart from the fact that NIKO has self- assessed the services received from HAES under Consulting Engineer Service initially, the services provided by HAES are appropriately classifiable under Consulting Engineer Service , it becomes clear that NIKO has short paid service tax inasmuch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is seen that the contract is executed for providing drilling rig along with personnel and related services to NIKO for its exploration activities of Cauvery Block in India. The impugned order notes that the services received by NIKO includes operating the rig with the personnel of HAES, providing project management, providing campsite, man-power planning etc., The Production Sharing Contract' entered with the Government by NIKO is to explore the presence of Hydrocarbons and exploration of oil and natural gas. The impugned order does not find that the service is one of hiring of rigs, ruling out the possibility of classification of the service as supply of tangible goods . Instead, it was held to be more akin to technical assistance in the pursuit of finding Hydrocarbon. The activity was felt to be in the nature of advice, consultancy or technical assistance and found to satisfy the definition of consulting engineer service as per section 65(31) which was a taxable for providing service as defined under section 65(105) [(g) of the Finance Act 1994. 7. We find that in Black's Law Dictionary, Eighth Edition, the word 'consultation' has been defined as an act of askin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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