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2014 (10) TMI 94 - AT - Service TaxSurvey and exploration of mineral, oil and gases - Off-shore jack up drilling rig services - Held that:- it would appear that the activity is not limited to exploration alone but if the well is successful it will be used for mining the oil also. - appellants relied upon the decision in the case of M/s. Atwood Oceanics Pacific Ltd. reported in 2012 (12) TMI 425 (CESTAT) - it may not be correct to take a view that drilling a well in this case is basically a part of pre-mining activity. Therefore from the definition itself, it is possible to take a view that appellant may not be liable to pay tax. In addition to that as submitted by the appellants, they had brought it to the notice of GSPC on 5.10.2004 and had sought GSPC confirmation and further GSPC had issued a letter to them that no service tax would be liable in view of the fact that its distance in terms of nautical miles from Kakinada shore base is more than 12 nautical miles and therefore the activity is not liable to service tax. However, the Commissioner in this case has relied on a subsequent letter issued by Directorate General of Hydrocarbons (DGHC) that wells are within 12 nautical miles of Indian landmass Hope Island, which is part of India is less than 12 nautical miles from all the wells. In our opinion, two opinions given by expert body like DGHC about the distance itself would show that demand cannot be extended beyond normal period. Moreover, it was also submitted that the appellant has explicitly communicated to GSPC that in the event any service tax is demanded, the burden would be on GSPC. In the absence of evidence to show that GSPC has not rejected this contention and in the absence of any such finding by the Commissioner, which compels us to accept this submission, what emerges is the fact that appellant had no reason not to pay service tax since in any case GSPC was liable to pay. - demand and penalty set aside - Decided in favor of assessee.
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