2019 (3) TMI 1429 - AT - Service Tax

Tribunal Rules on Supply of Goods vs. Services: Refund Claim Upheld, Unjust Enrichment Rejected

Commissioner of Service Tax, Chennai Versus Hardy Exploration & Production (India) Ltd.

Commissioner of Service Tax, Chennai Versus Hardy Exploration & Production (India) Ltd. - TMI Issues Involved:1. Classification of services provided by Aban Offshore Ltd.2. Applicability of the Bombay High Court judgment in the INSA case.3. Time-bar under Section 11B of the Central Excise Act, 1944.4. Production of documentary evidence regarding the incidence of duty.5. Requirement of a disclaimer certificate from Aban Offshore Ltd.6. Applicability of the doctrine of unjust enrichment.7. Relevance of expert opinion in determining the nature of services.Issue-wise Detailed Analysis:1. Classification of Services Provided by Aban Offshore Ltd.:The respondents entered into a production sharing contract and engaged Aban Offshore Ltd. for the supply and operation of a 'Floating Rig.' Aban charged service tax under 'mining service.' The respondents claimed a refund, asserting that the service tax was erroneously paid under 'mining service' instead of 'supply of tangible goods service,' which became taxable only from 16.5.2008. The original authority rejected the refund claim, but the Commissioner (Appeals) allowed it, concluding that the supply of floating rigs fell under 'supply of tangible goods service' and not 'mining service.'2. Applicability of the Bombay High Court Judgment in the INSA Case:The respondents relied on the Bombay High Court judgment in the INSA case, which held that the supply of rigs falls under 'supply of tangible goods service.' The original authority rejected this reliance, noting that the department had filed an SLP in the Supreme Court against the INSA judgment. However, the Commissioner (Appeals) accepted the INSA judgment, which was affirmed by the Supreme Court, thereby supporting the respondents' claim.3. Time-bar Under Section 11B of the Central Excise Act, 1944:The original authority rejected part of the refund claim as time-barred under Section 11B. The respondents argued that the tax was paid under a misinterpretation of law and hence collected without authority. The Commissioner (Appeals) and the Tribunal noted that in cases of tax paid under mistake of law, the limitation period under Section 11B does not apply, as supported by various High Court judgments.4. Production of Documentary Evidence Regarding the Incidence of Duty:The original authority held that the respondents failed to produce sufficient documentary evidence to prove that the tax burden was not passed on to customers. However, the respondents provided certificates from CPCL and Aban, as well as agreements and invoices, indicating that the tax incidence was not passed on. The Commissioner (Appeals) accepted this evidence, and the Tribunal found no infirmity in this conclusion.5. Requirement of a Disclaimer Certificate from Aban Offshore Ltd.:The original authority noted the absence of a disclaimer certificate from Aban Offshore Ltd. The respondents later produced a certificate from Aban confirming that they had collected the service tax from the respondents and had no objection to the refund being granted. The Tribunal found this certificate sufficient to address the requirement.6. Applicability of the Doctrine of Unjust Enrichment:The original authority applied the doctrine of unjust enrichment, but the Commissioner (Appeals) and the Tribunal concluded that the respondents had provided sufficient evidence to show that the tax burden was not passed on to CPCL. The Tribunal referred to various judgments that supported the respondents' position on unjust enrichment.7. Relevance of Expert Opinion in Determining the Nature of Services:The respondents provided an expert opinion from the Indian School of Mines, Dhanbad, stating that the floating production system was used exclusively for post-production operations and not for mining. The Tribunal accepted this expert opinion, noting that the Revenue did not provide any counter-expert opinion. The Tribunal emphasized that expert opinions from credible sources should be given due respect unless contradicted by another expert authority.Conclusion:The Tribunal upheld the Commissioner (Appeals)'s order, concluding that the supply of floating rigs by Aban fell under 'supply of tangible goods service' and not 'mining service.' The Tribunal also held that the refund claim was not time-barred, the doctrine of unjust enrichment did not apply, and the respondents had provided sufficient documentary evidence. The appeal filed by the department was dismissed.