2016 (5) TMI 378 - AT - Service Tax

Tribunal rules in favor of appellant, waives pre-deposit, and clarifies service classification.

M/s Quippo Oil and Gas Infrastructure Ltd. Versus CST, Delhi

M/s Quippo Oil and Gas Infrastructure Ltd. Versus CST, Delhi - TMI Issues:1. Whether the condition of pre-deposit of service tax should be dispensed with.2. Classification of services provided by the appellant under the category of 'Site Formation and Clearance, Excavation and Earth Moving and Demolition Services' or 'mining services'.3. Imposition of interest and penalties under Section 76, 77, and 78 of the Finance Act.4. Applicability of the extended period for demand due to limitation.Analysis:1. The appellant sought dispensation of the pre-deposit of service tax amounting to Rs. 1,44,93,542 confirmed against them for the period 16/6/2005 to 31/5/2007. The appellant provided rig drilling services to Oil and Natural Gas Corporation Ltd. (ONGC) under a contract. The Revenue contended that the services provided by the appellant were classifiable under 'Site Formation and Clearance, Excavation and Earth Moving and Demolition Services' before 01/6/2007, leading to the demand of duty. However, the appellant argued that their drilling operations were part of mining services, supported by a Tribunal decision and a Board's letter clarifying the taxation of mining operations.2. The dispute revolved around the classification of the appellant's services. The appellant contended that their activities fell under mining services, citing the agreement with ONGC and relevant legal interpretations. The Revenue, on the other hand, supported the Adjudicating Authority's decision. The Tribunal found that the appellant started paying duty under mining services from 01/6/2007 and held that the same activity could not be classified under a different category before this date. The Tribunal agreed with the appellant's interpretation based on legal precedents and lack of evidence of malafide intentions.3. The imposition of interest and penalties under Section 76, 77, and 78 of the Finance Act was also challenged. The appellant argued that the demand was prima facie barred by limitation as there was confusion in the field and no evidence of intentional evasion of duty. The Tribunal found in favor of the appellant, considering the bonafide interpretation of complex legal provisions and lack of malafide intent on the appellant's part, leading to the decision to grant unconditional stay on the demand.4. The issue of limitation was crucial in this case. The Tribunal noted that the Revenue did not object to the appellant's payment under mining services post-01/6/2007, indicating acceptance of the activity falling under mining services. Given the legal interpretations and absence of evidence showing malafide intent, the Tribunal held that the demand was prima facie barred by limitation, leading to the decision to grant unconditional stay on the demand.