TaxTMI 
TaxTMI 
2011 (7) TMI 103
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....ered into by India and Norway and it is liable to be taxed only under that Treaty. 2. The applicant is the owner and operator of model support vessels for the global oil and gas service industry. The applicant has currently a fleet of 25 vessels in operation and 18 vessels under construction. The vessels include large anchor handling tug supply vessels, platform supply vessels, and other support vessels. The applicant has an integrated operation with offices in Norway , Brazil and Cayman Islands. It provides a wide range of services from its vessels, equipments and experienced onshore and offshore personnel with high focus on Health, Safety, Environment and Quality. 3. In the year 2009 the Oil and Natural Gas Corporation Ltd., hereinafter „ONGC‟, floated a tender for hiring of bundled services for 10,000 feet Water Depth Deepwater Rig. Four different companies, including the applicant, formed a consortium. An agreement in that behalf was entered into by them on 5.6.2009. The consortium submitted its bid on 10.6.2009 for the work. By letter dated 20.6.2005 ONGC awarded the work to the consortium. The letter of award provided that the period of the contract w....
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....ance from Ministry of Defence, Custom clearance etc rests with the Contractor." 6. Under the contract between the consortium and ONGC, ONGC was to make direct payments to each of the consortium members for performance of the work as provided in the contract undertaken by it. The consortium agreement between the applicant and the others was recognized by ONGC since the payments were to be made direct by ONGC to the applicant and the other three companies for the work done by each one of them. The applicant wanted to ascertain its tax liability as a result and made an application under section 197 of the Income-tax Act before the Deputy Director of Income-tax, International Taxation, Dehradun. According to the applicant it was liable to be taxed under section 44BB of the Income-tax Act and as such sought the determination of a withholding rate of 4.223% of the gross amount payable to the applicant by ONGC. By a terse order, the Deputy Director of Income-tax directed ONGC to deduct tax at the rate of 10% on all contractual payments. The applicant has produced a copy of that order. In the circumstances the applicant has sought a ruling as to whether it was not liable to be ....
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.... stand that the receipts of the applicant are covered under section 9(1)(vii) of the Income-tax Act, being fees for technical services and the applicant was not liable to be taxed under section 44BB of the Act especially in the context of the proviso thereto. The Revenue has taken up the position that the proviso as subsequently amended by way of clarification with effect from 1.4.2011 by adding section 44DA also within it and excluding income that falls within that provision from within the purview of section 44 BB of the Act has application. The amendment being clarificatory, it takes effect from the very inception of section 44BB of the Act. So viewed, income received by the applicant is outside the purview of section of 44 BB of the Act. The comments on the applicability of the Treaty after 1st January, 2010 claimed by the applicant, is not properly met except by repeating that the income derived by the applicant comes within sections 5 and 9 of the Income-tax Act under the chargeability laws in India. Same is the position with regard to the claim of the applicant that the service tax received by it and made over by it to the Government, cannot be treated as part of its income ....
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....ion 44 BB of the Act especially since there is no case that ONGC is not involved in prospecting, exploration and extraction of oil and the services being provided by the applicant are services in connection with that activity. 11. The second aspect to be considered is whether in view of the developments that took place after 1st January, 2010, the income of the applicant should be assessed only in the context of Article 25 of the India-Norwegian Treaty. It is not disputed that the applicant is rendering services in India and its income accrues in India but that income is liable to be assessed under section 44BB of the Act. The submission is that on the shares of the applicant being listed in the Oslo‟s stock exchange, in view of the managerial control of the applicant company being shifted to Norway, the India-Norwegian Treaty is attracted with effect from January 2010 and the provisions of the Treaty should be looked into for the purpose of assessment subsequent to January 2010. No dispute is raised by the Revenue regarding the claim of the applicant that though the company was registered in Cayman Islands the managerial control over it passed to Norway when the ap....
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.... context of Rule 6 of the Service Tax Rules, 1994 read with section 73A of the Finance Act. Hence, the amount collected as Service Tax by the applicant to be made over to the State, cannot be treated as consideration for the service rendered by the applicant to ONGC. That amount has to be deducted. 14. A reference to the letter of award of the contract shows that the rates specified therein are inclusive of Service Tax but that the applicant would be reimbursed by ONGC at actuals against documentary evidence. This is a matter of contract between the parties. But a look at section 68 of the Finance Act, 1994 shows that the liability to pay the Service Tax is on the Service provider. No provision in that Act is brought to our notice which provides that the service provider need not pay the tax if the Service receiver does not pay it to the Service provider. Section 73A of the Act and Rule 6 relied on regarding the depositing of tax with the Government cannot be taken to water down the obligation of the Service provider or relieve him from being assessed to tax. The liability remains that of the Service provider. 15. Section 44BB of the Income-tax provides for ascertainme....