2010 (12) TMI 12 - SC - Service Tax

Members of marine logistics association not liable for service tax under Section 65(105)(zzzy) for offshore vessel operations

SC held that members of the respondent Association were not liable to pay service tax for marine logistic services rendered by Offshore Support Vessels to ... Members of the respondent ­ Association - Liability for payment of service tax by virtue of the amendment brought in Section 65(105) by way of amendment in the Finance Act, 1994 w.e.f. 16.5.2008 by inserting a fresh entry namely Sec.65(105) (zzzzj) - Marine Logistic Services rendered by Offshore Support Vessels - present case is the period from 1.6.2007 to 15.5.2008 - Held that:- The nature of work that was required to be carried out by the Members of the respondent Association in terms of the contract entered into by them with the ONGC. The nature of work which are set out in the Schedule at P.200 of the Paper Book cannot be said to be even remotely connected and included within the ambit of the aforesaid expression as found in Section 65(105) Entry No. zzzy and therefore we affirm the order of the High Court in Indian National Shipowners Association [2009 (3) TMI 29 - BOMBAY HIGH COURT] to the aforesaid extent by looking into the facts in issue only. We, however, leave the question of law which has been decided by the High Court open to be considered at length in an appropriate case. Department is allowed to call for documents from the Members of Association or from the ONGC in order to ascertain whether any of the Members of the Association is carrying out any other duties and responsibilities other than what is mentioned in the aforesaid Schedule so as to ascertain whether or not they are liable to make payment of service tax Issues:Interpretation of Section 65(105)(zzzy) of the Finance Act, 1994 in relation to services provided by the Members of the respondent Association.Analysis:The appeal was filed against the judgment of the Bombay High Court, which set aside and quashed the notices issued by the appellant to the Members of the respondent Association. The High Court held that the services provided by the Members of the respondent Association did not fall under Section 65(105)(zzzy) of the Finance Act, 1994. The appellant argued that even though an amendment was made to include such services under Section 65(105)(zzzzj) w.e.f. 16.5.2008, the period in question was from 1.6.2007 to 15.5.2008. The appellant contended that the Members of the respondent Association were still liable to pay service tax under Section 65(105)(zzzy) for services related to mining of mineral, oil, or gas. However, the respondents argued that the nature of work carried out by the Members did not relate to mining activities and pointed out the specific tasks outlined in the contract with ONGC, which did not align with mining operations.The Supreme Court analyzed the nature of work specified in the contract between the Members of the respondent Association and ONGC. The Court found that the services provided, as detailed in the contract, did not strictly fall under the category of services related to mining of mineral, oil, or gas as per Section 65(105)(zzzy). The Court agreed with the High Court's decision that the work outlined in the contract was not connected to mining activities. Therefore, the Supreme Court affirmed the High Court's order based on the specific facts and nature of work involved. The Court left the question of law open for further consideration in an appropriate case.The Supreme Court directed the appellant to verify whether the Members of the respondent Association were engaged in any additional duties beyond those mentioned in the contract with ONGC to determine their liability for service tax. The appeal was disposed of in accordance with the observations and directions provided by the Court.