9911796707
TMI Blog2013 (11) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... d enumerated as a taxable service in Section 65(105)(zzv) of the Act. The show cause notices cover the period 2005-06 to February 2010, in respect of services provided to the Oil and Natural Gas Commission Ltd. (ONGC); and during the period 2005-06 to March 2008 to M/s Reliance Industries Limited (RIL). 2. The petitioner is an American company registered in British Virgin Islands ( a foreign company) operating in the specialised area of mineral exploration and prospecting and has developed advanced technology for the purpose. The recipients of the alleged taxable service ONGC and RIL entered into agreements with the petitioner for exploration and prospecting, for identification of oil and gas reserves in the sea bed within the territory authorised for exploration by India. The agreements were for long term leasing of Q-Marine technology in Indian offshore areas, during the periods in issue. Under the terms of the contract between the parties the petitioner employs its advanced three dimensional (3D) seismic data and acquisition and processing technology employing its technology and provides data to the recipients. The data acquisition and a part of the processing of the acquired ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity carried out offshore and beyond the 12 nautical miles limit from the Indian landmass, is outside the purview of provisions of the Act. In so far as the transactions with RIL, the petitioner did not remit tax on any portion of the gross value received, from RIL. 5. Responding to the three show cause notices issued by Revenue, petitioner submitted the relevant contractual documents and details of the gross amounts received in April 2006, information and material which we prima-facie consider was sufficient for a determination of liability to levy and collection of Service Tax. 6. In response to the show cause notices the petitioner pleaded alternatively: (i) That it is not liable to the levy of tax since the dominant activity is of acquisition of data by using its Q-Marine technology, a process that occurs offshore and beyond the purview of the Act. (ii) That the gross value received on the transactions must be apportioned between a value attributable to operations beyond the purview of the Act and the value attributable to operations (of final processing of data the petitioner was associated with) occurring within India the later being 4% of the total transaction value and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at the appropriate rate is leviable on the entirety of the value received by the petitioner from the recipients - ONGC/ RIL. The defence of the petitioner with regard to the illegality of invoking the extended period of limitation was rejected by the adjudicating authority on the ground that the petitioner did not disclose suo motu that the entire transaction was taxable; failed to disclose the gross value received in the ST-3 returns; and that conduct of the petitioner amounts to wilful suppression of material facts and violation of the provisions of the Act with intent to evade payment of tax, falling within the proviso to Section 73(1) of the Act. 9. For the present and at the interlocutory stage we are inclined to take only a prima-facie view on the issue whether the services provided by the petitioner, normatively falling within the taxable service under Section 65(104a) of the Act are nevertheless immune to tax on account of the services having been provided at locations beyond the territorial jurisdiction covered by provisions of the Act and the applicable statutory regime extending the territory of India for the purpose of fiscal levies, in particular provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and onshore services provided; and a reference to Section 65A of the Act and a Board circular explaining the scope of the said provision on the aspect of identifying and classifying a service when a bouquet of services are provided. The authority however, after setting out in brief the contentions of Revenue in the show cause notices, the detailed responses of the petitioner, both with regard to the claim of immunity on the ground of absence of territorial jurisdiction; divisibility of the composite transactions; and if at all chargeability to tax only of those components of services provided within the territorial purview of provisions of the Act, nevertheless in paragraph 312 set out a brief conclusion that as the transactions are covered under composite contracts, the transactions are integrated; and since the eventual deliverables occurred within Indian territory, the entire transaction and the gross value received therefor, is exigible to tax. This conclusion is the exclusive and underlying basis for the levy and the quantification of the tax due, assessed by the impugned order. Assessment of the liability to interest and penalties followed as a corollary. 12. Ld. DR Shri Am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... namely processed data made over to ONGC/RIL. 17. We therefore avoid an idle parade of familiar authority on the aspect whether services provided outside the Indian taxable territory are immune to tax under provisions of the Act, at this stage of proceedings. We proceed in the premise that there is no such liability. 18. Commissioner of Income Tax, Bombay vs. Ahmedbhai Umarbhai & Co. -AIR 1950 SC 134; Anglo-French Textile Company Ltd. vs. CIT, Madras- AIR 1954 SC 198; and Continental Construction Ltd. vs. CIT -195 ITR. 81 and Tata Iron and Steel Co. Ltd. vs. State of Bihar-AIR 1963 SC 577 are authorities for the principle that even composite, integrated transactions or transactions covered by a composite contractual instrument are yet subject to vivisection, to identify the taxable element and on such identification to apportion the taxable value for levy of tax; and after excluding the non- taxable component of the income or receipt. Prima-facie and at this stage we find no warrant to exclude this generic principle to provisions of the Act. We are therefore of the prima-facie view that services provided by the petitioner to ONGC/ RIL beyond the Indian taxable territory are pro-ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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