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2014 (11) TMI 128 - AT - Service TaxClassification of service - Contract to supply drilling rigs to ONGC - Drilling rigs hired by assessee - Supply of Tangible Goods for Use service - Imposition of interest and equivalent penalty - Held that:- From the terms of the agreement entered into between the appellant and M/s. ONGC, it is clear that the service provided by the appellant is essentially supply of drilling rig along with its personnel to operate the same on charter hire basis and the payment for the services rendered is made on per-day basis. Thus, from the terms of the contract, it is clear that the activity comes within the scope of ‘supply of tangible goods for use’. In the present case, the appellant has supplied drilling rigs along with the crew. Thus it is the appellant who has possession and effective control over the drilling rig. The crew so supplied are the employees of the appellant and not of ONGC. Consideration is paid on per-day basis. All these elements in the contract clearly show that there is no transfer of right of possession and effective control by the appellant to M/s. ONGC. The activity of supply with no legal right of possession and effective control is sought to be taxed under the entry (zzzzj). It is an accepted principle of interpretation that the contemporaneous construction placed by administrative or executive officers charged with executing a statute has to be given due diligence. In a case where the place of service recipient is not known or cannot be determined, then as per the said rule, the place of provision of service is that of the service provider. the service provider is situated in India and, therefore, the service has been provided in India and not elsewhere. Further, Rule 8 of the said Rules provides that, if any one of the service provider or receiver is located in the taxable territory, the place of provision of service will be the location of the service receiver. In the facts of the case before us, both the service provider as well as the service receiver are located in the taxable territory, namely, India. Therefore, the place of provision of service is India. Thus from whichever angle one looks at the issue, there cannot be any dispute on the fact that the service has been provided in India and not anywhere else. - Following decision of The Shipping Corporation of India [2013 (12) TMI 1124 - CESTAT MUMBAI] and Srinivasa Transports [2014 (6) TMI 205 - CESTAT BANGALORE] - classification of service under the taxable service category of “supply of tangible goods for use service” as defined in Section 65(105)(zzzzj) of the Finance Act, 1994 is upheld. Consequently, the demand of service tax under the said category along with interest thereon is upheld - However, penalty is set aside - Decided partly in favour of assessee.
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