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TMI Blog2025 (1) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... having fixed establishment in India in connection with survey, geological studies, seismic analysis, reservoir estimation, drilling etc. In the case of M/s. High Arctic Energy Services (HAES), Canada, they had received service relating to drilling rigs during the period from May 2007 to January 2008 and reportedly paid service tax on the value of the gross amount paid to HAES. In order to verify their claim of appropriate payment of service tax, the Vendor Open Transaction Report of HAES was obtained from Niko and reconciled with the value of service tax paid as declared in ST-3 returns. It appeared that Niko had failed to pay service tax on the value of mobilization charges, diesel reimbursement charges, cost of rig move etc. amounting to Rs.5,46,29,417/- and value of service tax not paid worked out to Rs.67,52,196/- including cess. Accordingly, Show Cause Notice cum demand notice dated 18.04.2012 was issued to Niko, invoking the extended period. After due process of law, the Ld. Adjudicating Authority confirmed the demand of service tax as per sec. 65(105)(g) of FA1944, as 'Consulting Engineer Service' along with interest and imposed penalty under section 78 and 77(2) of the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing engineer's services". Hence, he submitted that in terms of Section 67 of the Finance Act, 1994, no service tax is payable on these reimbursements/costs. This position has been upheld by the Hon'ble Supreme Court in the case of Intercontinental Consultants & Technocrats Pvt. Ltd. (2018 (3) TMI 357-SC] vi. Without prejudice to the above, he submitted that no cogent reasons have been laid down for the invocation of the extended period of limitation and imposition of equivalent penalty under Section 78 of the Finance Act, 1994. In light of the above, the Ld. Counsel prayed that the appeal be allowed and the demands raised along with interest and penalty be quashed in toto. 3.2 The learned AR took us through the OIO. He mainly relied on the paragraphs reproduced below, to high light the issue involved and to state revenue's view on the matter; "6.1 On perusal of the documents furnished by NIKO along with the written reply, it is seen that HAES has confirmed its agreement to provide the Drilling Unit 250K CDWS for NIKO for its exploration activities of Cauvery Block in India The compensation schedule lists the rates and charges such as Mobilization charges, Rig oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .2 Having seen the facts of the case, the relevant statutory provisions are to be seen. Section 65(31) defined, consulting engineer as: *consulting engineer means any professionally qualified engineer or any body corporate or any other firm who, either directly or indirectly, renders any advice, consultancy or technical assistance in any manner to any person in one or more disciplines of engineering." Section 65(105) [(g) defines taxable service as "any service provided or to be provided to any person, by a consulting engineer in relation to advice, consultancy or technical assistance in any manner in one or more disciplines of engineering including the discipline of computer hardware engineering." CBEC vide Circular No.B43/5/97-TRU dated 2.7.97 has clarified the scope of "Consulting engineer' service", wherein the scope of the service is defined as under: 4.3...... The scope of the services of a consultant may include any one or more of the following categories: (i) Feasibility study. (ii) Pre-design services/project. (iii) Basic design engineering. (iv) Detailed design engineering. (v) Procurement. (vi) Construction supervision & project management. (v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion or effective control. Supply of tangible goods for use and leviable to VAT/sales tax as deemed sale of goods, is not covered under the scope of the proposed service. Whether a transaction involves transfer of possession and control is a question of facts and is to be decided based on the terms of the contract and other material facts. This could be ascertainable from the fact whether or not VAT is payable or paid." From a joint reading of the above, it is clear that Mere transfer of goods for use for a specific period for lease/hire charges without transfer of possession and effective control of the goods to the transferee/lessee amounts to service covered under 'Supply of Tangible service' 6.4 In the case at hand, HAES has executed a contract for providing Drilling Rig Services' and not for simple hiring of the Rig. The services received by NIKO includes operating the rig with the personnel of HAES, providing project management, providing campsite, man- power planning etc., The 'Production Sharing Contract' entered with the Government by NIKO is in the pursuit to explore the presence of Hydrocarbons capable of mining and exploration of oil and natural gas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... challenging the same, more so, which revenue seeks to reopen the assessment and demand duty. As stated by the Apex Court in its judgment in Dunlop India Ltd. & Madras Rubbery Factory Ltd. Vs. UOI [1983 (13) ELT 1566 (SC)], there is no estoppel in law against a party in taxation matters and hence they were free to raise the question of law before the Original Authority. 6. From the agreement conditions entered into by the appellant with HAES, which is summarised in the extract of the OIO above, it is seen that the contract is executed for providing drilling rig along with personnel and related services to NIKO for its exploration activities of Cauvery Block in India. The impugned order notes that the services received by NIKO includes operating the rig with the personnel of HAES, providing project management, providing campsite, man-power planning etc., The 'Production Sharing Contract' entered with the Government by NIKO is to explore the presence of Hydrocarbons and exploration of oil and natural gas. The impugned order does not find that the service is one of hiring of rigs, ruling out the possibility of classification of the service as 'supply of tangible goods'. Instead, i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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