Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2022 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (1) TMI 207 - AT - Service TaxConsideration for the services - Mining services - whether entitlement towards “Cost Petroleum” under the “Production Sharing Contract” can be treated as “consideration” for rendering “mining services” to the Government of India? - transaction on principal-to-principal basis - Production Sharing Contract - Joint Venture agreement - HELD THAT:- This precise issue was examined at length by the Division Bench of the Tribunal in the decision rendered by the Tribunal on 06.10.2021, in the case of the appellant itself, in B.G. EXPLORATION & PRODUCTION INDIA LTD. VERSUS COMMISSIONER OF CGST & CEX., NAVI MUMBAI [2021 (10) TMI 306 - CESTAT MUMBAI]. The Tribunal, after referring to the earlier decision of the Tribunal rendered on 11.06.2020 in the case of the appellant in BG EXPLORATION & PRODUCTION INDIA LTD VERSUS COMMISSIONER OF SERVICE TAX (AUDIT-I) MUMBAI [2020 (10) TMI 579 - CESTAT MUMBAI], the decision of the Tribunal in MORMUGAO PORT TRUST VERSUS COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX, GOA- (VICE-VERSA) [2016 (11) TMI 520 - CESTAT MUMBAI] and the decision of the Supreme Court in FAQIR CHAND GULATI VERSUS UPPAL AGENCIES PVT. LTD. [2008 (7) TMI 159 - SUPREME COURT] and after noticing that an appeal had been filed by the Department in the Bombay High Court against the decision of the Tribunal rendered on 11.06.2020, observed that the Government of India with the appellant, RIL and ONGC had entered into a joint venture agreement, whereunder each co-venturer had its own set of obligations and the responsibility discharged by each of the co-venturers towards the venture was not by way of any service rendered to the joint venture, but in their own interest in furtherance of the common objective of the joint venture. Service tax liability, therefore, could not have been fastened upon the Appellant. From the provisions of the Production Sharing Contract it is clear that Cost Petroleum and Profit Petroleum cannot be said to be consideration flowing from the Government of India to the appellant and that the components of “Cost Petroleum” and “Profit Petroleum” are inherent and embedded part of the Production Sharing Contract. Consequently, such components cannot be treated as “consideration” for the “services rendered” by the appellant. A perusal of the Circular dated 12.02.2018 reveals that Contractors carry out the exploration and production of petroleum for themselves and not as a service to the Government of India and “Cost Petroleum” is not a consideration for service to Government of India and thus not taxable per se. It is, therefore, more than apparent that the aforesaid Circular only confirms the view taken by the Tribunal in the decision rendered on 06.10.2021 of appellant earlier case. Appeal allowed - decided in favor of appellant.
|