TMI Blog2024 (4) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... il well are integrally connected with the mining of oil or gas and have a direct nexus with the drilling of a well. Thus, these activities would be covered by the taxable category of mining service w.e.f. 01.06.2007. Reliance has been placed on the decision of the Bombay High Court in INDIAN NATIONAL SHIPOWNERS' ASSOCIATION VERSUS UNION OF INDIA [ 2009 (3) TMI 29 - BOMBAY HIGH COURT] , wherein it was held that though the phrase in relation to is of wide import but the context in which the same is used has to be kept in mind and that the services rendered by a person must have a direct or a proximate relation to the subject matter of the taxing entry. The Bombay High Court also held that the context in which the words in relation to are used has to be borne in mind to examine the extent of the scope of an entry which may be of wide amplitude. The issue that needs to be decided is whether the activity carried out by the appellant would fall under TTA services prior to 01.06.2007. According to the appellant, the said activity will be covered under the scope of mining related services under section 65 (105)(zzzy) of the Act w.e.f. 01.06.2007. The contention is that on introduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (b) Perforation services and other mechanical jobs (c) Logging While Drilling LWD services and Measurement While Drilling MWD services. 4. These services were provided by the appellant in the mineral oil wells of ONGC at the onshore and offshore locations in the western, eastern and southern regions of India and in the oil wells of Cairn. The appellant contends that for performing these activities below the ground, it has to deploy sophisticated electronic tools which can work in hostile environment with extreme pressures and temperatures. These tools are called logging tools. 5. The activity of wireline logging involves systematic gathering of measurements of characteristics of the underground rock formations and strata traversed by the cased and open holes drilled by the customers. This activity is performed by deployment of logging tools on wires in the holes. The measurements are transmitted uphole via an electro-mechanical cable. The data is recorded on digital mechanical tapes by the computer on surface, which gives the output known as logs . These logs are then provided by the appellant to the customers. 6. The activity of perforation involves creation of holes in the casi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er (Appeals) are: 4. ***** I find that even as per declarations and statements of the appellants made in the appeal memorandum itself, the activities involved testing by way of measurement of various technical parameters as mentioned above in detail and analysis thereof for the purpose best known to them and their clients probably required the said parameters by way of testing and analysis thereof for the evaluating the efficiency and productivity of oil or gas well. I find that the submissions of the appellants that some of the mechanical jobs such as cutting, puncture, plug, packers setting and cable splicing etc. are undertaken while conducting the subject wireline well logging services do not have any bearing or implication on the nature of the activities undertaken by them which are basically testing and analysis service used by the clients in activities of oil and gas Exploration Exploitation undertaken by ONGC Ltd. and Cairn Ltd.. I find that the fact that such testing and analysis services are specialized ones and are required and used for the Exploration Exploitation services, does not alter the basic nature of the said services and does not effect its classification under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns: (i) The refund claim of Rs. 4,15,65,474/- has been rejected on the sole premise that the appellant had correctly paid service tax under the category of TTA Service and, therefore, there was no erroneous payment of service tax. The finding cannot be sustained as in the case of the appellant itself in M/s. Schulmberger Asia Services Ltd. vs. Commissioner, Service Tax, Delhi Service Tax Appeal No. 55299 of 2013 decided on 03.07.2023 the Tribunal has decided that the activities performed by the appellant would be correctly classifiable under the category of mining service. A similar finding has been rendered in HLS Asia Ltd. vs. Commissioner, Service Tax Commissionerate, New Delhi 2023 (3) TMI 379-CESTAT New Delhi ; (ii) Once a taxable entry has been introduced without any change to the existing entries, the levy cannot sustain under any other category prior to such introduction; (iii) The activities undertaken by the appellant do not qualify as technical testing and analysis services; (iv) Wireline logging, perforation and other mechanical jobs undertaken by the appellant fall under the taxable category of mining service ; and (v) The extended period of limitation could not have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under. 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 substance which is employed to detect the presence or identity of any ingredient in a compound, by causing it to exhibit some known property; a reagent To try; to subject to trial and examination; and to prove, as by experiment or by some fixed standard; to refined, as gold or silver, in cupellation; to examine as by the application of some reagent. To make, give or achieve a certain rating or score from an examination; to undergo a trial; to be analyzed. Words and Phrases Permanent Edition Volume 41A : Testing means the act of proving the truth, genuineness, or quality of anything by experiment, or by some principals or standard. Ainsworth v. McKay, 175 P. 887, 888, 55 Mont. 270 ANALYSIS Webster s Dictionary : The resolution of a compound object into its constituent elements or component p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h 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 legislative bill. (2) A standard unit used to express size, amount or degree . An instrument used as a container, rod, or tape marked with standards units and used for measuring. (3) (A measure of) a certain amount or degree of . an indication of extent or quality. In Webster s Dictionary: To ascertain the extent, dimensions capacity of, esp. against some standard; to judge the greatness or import of; to value; to proportion; to allot or distribute by measure, to serve as a measure. 24. The word measure would, therefore, relate to determining the quantum or characteristic of a particular thing. It is the act of ascertaining the dimensions, extent or other parameters against a measure or a standard. 25. It would, therefore, be appropriate to examine the scope of the work to be provided by the appellant in the contract dated 08.04.2002 entered into between the appellant and ONGC. Under the Agreement da ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eline 2) a curve or set of curves or symbols that records the physical, electrical, radioactive, and/or sonic properties of rocks and fluids in the rocks in a wellbore 3) the process of making a well log 4) a written record of events during drilling a well such as driller s pr drilling time log 5) a record of detected imperfections in a pipe inspected by electronic equipment 2. Well log A record of rock and fluid properties with depth in a well. A well log is usually plotted on a long strip of paper with depth in the well in the depth track down the length of the strip A well log can be either a single type of measurement or several types of measurements plotted together. Some different types of well logs include drilling time, sample or lithologic, mud, and wireline well logs. The wireline well logs are made by lowering sensors in a sonde or tool down the well on a wireline. Wireline well logs include electric, induction, gamma ray, neutron porosity, formation density, caliper, and dipmeter logs. 3. Wireline logging The evaluation of a well using a sonde run into the well on a wireline The sonde is hoisted onto the drill floor and lowered down the well. Electrical, acoustical, and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxable category of mining service introduced w.e.f. 01.06.2007. Section 65(105)(zzzy) of the Finance Act defines the said taxable service as any service provided or to be provided to any person, by any other person in relation to mining of mineral, oil or gas. 32. The services like wireline logging, perforation and other wireline related services involving mechanical jobs like cutting, puncture, plug/packer setting, cable splicing, etc., which were undertaken by the appellant at the time of drilling an oil well are integrally connected with the mining of oil or gas and have a direct nexus with the drilling of a well. Thus, these activities would be covered by the taxable category of mining service w.e.f. 01.06.2007. 33. In this connection, reliance has been placed on the decision of the Bombay High Court in Indian National Shipowners Association vs. Union of India and others 2009 (14) S.T.R. 289 (Bom.) , wherein it was held that though the phrase in relation to is of wide import but the context in which the same is used has to be kept in mind and that the services rendered by a person must have a direct or a proximate relation to the subject matter of the taxing entry. The Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, have been categorized under TTA service prior to 01.06.2007. 45. 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. 37. In view of the aforesaid decision, it has to be held that as the activity undertaken by the appellant w.e.f. 01.06.2007 pertains to mining services 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. 38. For all the reasons stated above, the activities undertaken by the appellant cannot be classified under technical testing and analysis service (TTA services) as defined under section 65(106) of the Finance Act and deserve classification under mining services made taxable under section 65(105)(zzzy) of the Finance Act w.e.f. 01.06.2007. 39. The order dated 30.10.2009 passed by the Commissioner (Appeals), therefore, cannot be sustained and is set aside and the appeal is allowed. The appellant is entitled to refund with applicable rate of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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