TMI Blog2013 (11) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... y granted. - Appeal No. 58089 of 2013 - Stay Order No. 59797/2013 - Dated:- 30-10-2013 - Mr. G. Raghuram and Mr. Sahab Singh, JJ. For the Appellant : Shri V. Lakshmikumaran, Advocate For the Respondent : Shri Amresh Jain, DR JUDGEMENT Per: Justice G. Raghuram: The assessee is the appellant / petitioner and the appeal is preferred against the adjudication order dated 15.03.2013 passed by the Commissioner, Service Tax, New Delhi confirming service tax demand of Rs.346,15,18,778/-; besides interest under Section 75; penalty in an amount equivalent to the tax, under Section 78 of the Finance Act (the Act) and penalty under Section 77 of the Act, for contravention of Section 70 in not filing ST-3 returns periodically. The assessed liability is pursuant to three show cause notices dated 19.10.2010, 24.10.2011 and 16.01.2013 alleging under-declaration or non-declaration of the gross value received for providing the taxable service of survey and exploration of mineral defined in Section 65(104a) and 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge pertaining to Q Marine Technology. The show cause notices assert that since the eventual delivery of services to the service recipients is of the processed data and a part the processing occurs within the Indian landmass; the deliverable obligations of the petitioner in respect of the taxable service are pursuant to composite agreements comprising both the offshore data acquisition process and part processing of data; and the final processing of data and delivery of the data so processed, in Indian territory, the service provided by the petitioner falls within the taxable survey and exploration of mineral service and is thus liable to tax. 4. In so far as the transaction with ONGC is concerned, the petitioner has remitted tax on 4% of the gross value received from ONGC, computing that percentage of the value received, as attributable to the taxable activity falling within the reach of provisions of the Act. The petitioner did so on the assumption that its data acquisition and part processing of such data, being activity 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 trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act have no extra- territorial vitality; the adjudicating authority failed to critically examine and deal with this contention, except referring to the assertion that the overseas activities were beyond the 12 nautical miles limit. However, at paragraph 312 of the adjudication order, the authority set out the distillate of its conclusion; that data acquisition and processing of such acquired data provided offshore (beyond 12 nautical miles); and the other component, of the final processing of the data and delivery to the recipient ONGC / RIL, within the Indian territory is one seamless and integrated activity; that as the deliverables are admittedly within the Indian territory and the activities of the petitioner both offshore and land based satisfy the definition of the taxable service - survey and exploration of mineral; the entire transaction and the gross value received therefor is taxable; the operations are incapable of vivisection between operations within the taxable territory and those without; and consequently 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 petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired data predominantly on board its vessels at offshore locations and partly within the Indian landmass are distinct activities; that data acquisition and processing of data need not be entrusted to the same entity; specifying instances where data acquisition and processing were entrusted to different entities, by one of the recipients - ONGC; and that in the circumstances the distinct services provided by the petitioner i.e. data acquisition and processing could and ought to be segregated and that part of processing activity of the petitioner which falls within the defined locus of the taxable service under Section 65(104a) alone would be exigible to tax, if at all. At para 203 the authority extracts the several decisions proferred by the petitioner to support its contention as to severability of the services, on the basis of availability of the territorial jurisdiction to levy and collect service tax. 11. In the adjudication order however we find only a passing reference to the contentions of the petitioner regarding offshore 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions were beyond the purview of provisions of the Act, by application of the doctrine of non-traverse is an aspect more appropriately considered at the hearing of the appeal. 15. For the nonce we proceed on the premise, in particular in view of the observations in paragraph 312, considered in the context of the elaborate pleadings by the petitioner (set out in paragraphs 108 to 150), that the adjudicating authority proceeded on the premise that data acquisition and substantial processing of the data beyond the 12 nautical miles constitutes activity (of the provision of the taxable service), ex-territori. 16. Ambivalently but nevertheless Revenue suggests that services provided beyond Indian territory (the territorial waters limit) covered by provisions of the Act, are not exigible to service tax. The adjudication order and its defence by Revenue before us is however, predicated on the premise of integrity of the contract; its objectives and the destination of services being within the Indian territory vide the ultimate deliverables, namely processed data made over to ONGC/RIL. 17. We therefore avoid an idle parade of familiar authority on the aspect whether services provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es further scrutiny and analyses, and at hearing of the appeal. Since this assertion of the petitioner in the adjudication proceedings was not contested by Revenue, which proceeded on the assumption that entire transaction is taxable, we assume in the circumstances, that only 4% of the gross value received by the petitioner is attributable to the taxable component of services provided, for the nonce. The resultant tax liability, in respect of services provided to RIL is thus assumed to be Rs. 60 lakhs. 22. In the circumstances above, we grant waiver of pre-deposit and stay all further proceedings for realisation of the adjudicated liability, pending disposal of the appeal, on condition that the petitioner/appellant remits Rs. 60 lakhs (Rupees sixty lakhs) plus the proportionate interest thereon (referable to the inland services provided to RIL) to the credit of Revenue within four weeks from today and report compliance by 19.12.2013. In default of compliance and furnishing proof of compliance within the time stipulated, the stay granted herein shall stand dissolved forthwith on default, without further reference to this Tribunal 23. Application is disposed of accordingly. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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