2009 (9) TMI 198 - AT - Service Tax

Debate on Appellant's Activity Classification: Deposit Required, Waiver Partial, Recovery Stayed

The Tribunal found the issue of classifying the appellant's activity under 'survey and exploration of minerals' or 'supply of tangible goods' to be highly ... Demand contested on ground that activity of supplying rigs and drilling of wells will not amount to services under “Survey and Exploration of Minerals” - It is his submission that from 1-6-2006, they have started discharging Service Tax under the category of ‘supply of tangible goods’. It is his submission that the stay petition may be allowed and the condition of pre-deposit be waived. - we find that the issue involved in this appeal is highly debatable one. The issue is regarding whether the activity of appellant would fall under the category of “survey and exploration of minerals” during the period 10-9-2004 to18-4-2006 needs to be gone into detail, as location of well and other issues needs detailed appreciation of records and evidences. - applicant has not made out prima facie case for complete waiver of the pre-deposit of the amounts – stay granted partly Issues Involved:Waiver of pre-deposit of confirmed amounts in a service tax case; Whether the appellant's activity falls under the category of 'survey and exploration of minerals' or 'supply of tangible goods'; Claim of time bar for the demand; Interpretation of an order passed by the Commissioner of Central Excise, Ahmedabad; Prima facie case for complete waiver of pre-deposit.Analysis:The appellant filed a stay petition against the waiver of pre-deposit of confirmed amounts, including Service Tax, Interest, and Penalties. The appellant argued that their activity of supplying rigs and drilling wells should not be classified as services under 'Survey and Exploration of Minerals' but rather as 'supply of tangible goods.' They highlighted an agreement with Gujarat State Petroleum Corporation and correspondence with departmental officers to support their claim. The appellant also referred to a similar case where the proceedings were dropped by the Commissioner of Central Excise, Ahmedabad. They requested a complete waiver of pre-deposit, emphasizing that they had started discharging Service Tax under a different category from a specific date.On the other hand, the Revenue's Special Counsel contested the appellant's claims, stating that further investigation was needed regarding the time bar issue and the geographical location of the well within 12 nautical miles. The Counsel also argued that the Commissioner's order needed careful examination as it was lengthy. They suggested imposing conditions on the appellant before hearing their appeal.After considering both sides and reviewing the records, the Tribunal found the issue to be highly debatable. It was crucial to determine whether the appellant's activity fell under 'survey and exploration of minerals' during a specific period, requiring detailed examination of evidence and records. The Tribunal concluded that the appellant had not established a prima facie case for complete waiver of pre-deposit. Consequently, the appellant was directed to deposit a specified amount within eight weeks, with the remaining balance waived subject to compliance, and recovery stayed until the appeal's disposal.