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TMI Blog2018 (2) TMI 945X X X X Extracts X X X X X X X X Extracts X X X X ..... under the above category of service did not include freight charges and equipment rental charges etc., in their total taxable value. The department was of the view that as per Rule 5(1) of Service Tax (Determination of Value) Rules 2006, any expenditure or cost which are incurred by the service provider in the course of providing taxable services are to be treated as consideration and has to be included in the value of taxable services for levy of service tax. Show Cause Notice was issued raising the above allegations and proposing to demand service tax along with interest and for imposition of penalties. After due process of law, the original authority confirmed an amount of Rs. 1,88,83,236/- along with interest and imposed penalty of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... if it is assumed that renting of equipment is liable to service tax, the same would become taxable under the category of supply of tangible goods service . The said section has been introduced only w.e.f. 16.05.2008 and therefore the demand cannot sustain. The Ld. Counsel pointed out that the only provision invoked in the SCN is Rule 5 (1) of Service Tax (Determination of Value) Rules 2006, alleging that the appellant has not included the freight charges and equipment rental charges in the taxable value. These are expenses incurred by the appellant for providing the taxable services of Survey and Exploration of Mineral, Oil or Gas service. That therefore the appellant has rightly excluded such charges for discharging liability of service ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er:- "HARDY EXPLORATION & PRODUCTION (INDIA) INC., a company incorporated under the laws of State of Delaware, USA having its project office in India at 5th Floor, DBS Westminster Building 108, Dr. Radhakrishnan Salai, Chennai- 600004 (hereinafter called Company ) ODFJELL WELL SERVICES LIMITED, a company incorporated under the laws of Norway, having its Operating office at P.O. Box 17354, Jebel Ali Free Zone, United Arab Emirates (hereinafter called Contractor). WHEREAS the Company and Participants wishes that the Contractor provides drilling & fishing tools, equipment, appurtenances and personnel in accordance with the Contract in connection with the Company and Participants activities in PY-3 Field, Block CY-OS/2 Offshore East Cost ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Odfjell Well Services Ltd., UAE, the work involves drill vertical wells and evaluate the reservoir, test the well conventionally to evaluate reservoir potential for which the contractors (Odfjell Well Services) provide various equipments on rental basis to the appellants and also provide service engineers who have experience with the equipments. The contractors raised invoices on the appellant towards freight and clearing charges for the import of equipments, fishing service engineering charges and equipment rentals etc. The appellants discharged service tax under reverse charge basis, on clearing charges and service engineering charges paid by them but did not pay service tax on freight charges and equipment rental charges. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ultra vires. The relevant part of judgment is quoted as under:- 18. Section 66 levies service tax at a particular rate on the value of taxable services. Section 67(1) makes the provisions of the section subject to the provisions of Chapter V, which includes Section 66. This is a clear mandate that the value of taxable services for charging service tax has to be in consonance with Section 66 which levies a tax only on the taxable service and nothing else. There is thus inbuilt mechanism to ensure that only the taxable service shall be evaluated under the provisions of 67. Clause (i) of sub-section (1) of Section 67 provides that the value of the taxable service shall be the gross amount charged by the service provider for such service . R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of Section 94 of the Act, every rule framed by the Central Government shall be laid before each House of Parliament and that the House has the power to modify the rule. As pointed out by the Supreme Court in Hukam Chand v. Union of India, AIR 1972 SC 2427 :- "The fact that the rules framed under the Act have to be laid before each House of Parliament would not confer validity on a rule if it is made not in conformity with Section 40 of the Act." Thus Section 94(4) does not add any greater force to the Rules than what they ordinarily have as species of subordinate legislation." 8. The said decision was followed by the Tribunal in the case of Dream Loanz Vs. CCE, Coimbatore 2017 (6) GSTL 443 (Tri.-Chen.). Following the ratio laid in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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