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2024 (4) TMI 36
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....ne logging and perforation during the relevant period from December 2003 to November 2004 under the category of 'technical testing and analysis' TTA services services defined under section 65(106) of the Finance Act and made taxable under section 65(105)(zzh) of the Finance Act. The term 'technical testing and analysis agency' has been defined under section 65(107) of the Finance Act. 3. The appellant was providing services in the exploration and production sector to M/s. Oil and Natural Gas Corporation ONGC and Cairn Oil and Gas, Vedanta Ltd Cairn. These services included the following activities: (a) Wireline logging services (b) Perforation services and other mechanical jobs (c) 'Logging While Drilling' LWD services and 'Measurement While Drilling' MWD services. 4. These services were provided by the appellant in the mineral oil wells of ONGC at the onshore and offshore locations in the western, eastern and southern regions of India and in the oil wells of Cairn. The appellant contends that for performing these activities below the ground, it has to deploy sophisticated electronic tools which can work in hostile environment with extreme pressures....
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....perforation and other mechanical jobs provided by the appellant to ONGC and the service tax on these services paid by the appellant earlier to 01.06.2007 was not payable under category of TTA services. The appellant registered itself under the taxable category of 'mining service' and started discharging service tax on the activities performed for ONGC and Cairn w.e.f. 01.06.2007. The appellant disclosed this fact to the department and declared the service under the category of 'mining services' in the ST-3 returns. 9. As noticed above, the Commissioner (Appeals), by order dated 30.10.2009, dismissed the appeal filed by the appellant. The relevant findings recorded by the Commissioner (Appeals) are: "4. ***** I find that even as per declarations and statements of the appellants made in the appeal memorandum itself, the activities involved testing by way of measurement of various technical parameters as mentioned above in detail and analysis thereof for the purpose best known to them and their clients probably required the said parameters by way of testing and analysis thereof for the evaluating the efficiency and productivity of oil or gas well. I find that the submissio....
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....ellants is not sustainable. Regarding the reliance of the appellants on the judgement in the case of Indian National Ship owners' Association Vs. UOI-2009(14) STR 289(Bom), I find that ratio of the said judgment cannot be applied to the instant case as it has already been held above that services undertaken by the appellants were correctly covered by the "Technical Testing and Analysis Services" and not by the new entry of "Mining Service" introduced in the Section 85 of the Act ibid. 1.06.2007. In view of the above, I do not find any infirmity in the impugned order and uphold the same." (emphasis supplied) 10. Shri B.L. Narasimhan, learned counsel for the appellant assisted by Shri Kunal Agarwal made the following submissions: (i) The refund claim of Rs. 4,15,65,474/- has been rejected on the sole premise that the appellant had correctly paid service tax under the category of TTA Service and, therefore, there was no erroneous payment of service tax. The finding cannot be sustained as in the case of the appellant itself in M/s. Schulmberger Asia Services Ltd. vs. Commissioner, Service Tax, Delhi Service Tax Appeal No. 55299 of 2013 decided on 03.07.2023 the....
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....lysis agency" means any agency or person engaged in providing service in relation to technical testing analysis." 16. Section 65(105)(zzh) of the Finance Act provides that 'taxable service' means any service provided or to be provided to any person, by a technical testing and analysis agency, in relation to technical testing and analysis. 17. A perusal of section 65(106) of the Finance Act indicates that the service should be in relation to physical, chemical, biological or any other scientific testing or analysis; such service should be provided by an agency engaged in providing services of technical testing; and the object tested is either goods or materials or any immovable property. 18. The terms 'testing' and 'analysis' used in the said definition have not been defined in the Finance Act or the Central Excise Act, 1944 or the Rules made thereunder. Reference can, therefore, be made to the meanings of these terms available in the standard dictionaries/texts. TESTING Webster's Dictionary: "Any trial or examination; means of trial; a criterion; a standard; means of discrimination; a group of questions or problems to be answered or solved as a g....
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....g of this term in dictionaries and it is as follows: MEASUREMENT McGraw - Hill Encyclopedia of SCIENCE Et TECHNOLOGY 5TH Edition Measure : "A reference sample used in comparing lengths, areas, volumes, masses and the like. The measure employed in scientific work are based on the international units of length, mass and time - the meter, the kilogram, and the second - but decimal multiples and submultiples are commonly employed." Measurement as defined in Oxford's Dictionary: "The action of measuring.> an amount, size, or extent as established by measuring.> a unit or system of measuring." Measurement as defined in Webster's Dictionary: "The action of measuring; the amount or size ascertained by measuring; the amount or size ascertained by measuring; a system of measuring." 23. Measure is defined in the dictionaries in the following manner: MEASURE In Oxford's Dictionary: "(1) Ascertain the size, amount, or degree of (something) by comparison with a standard unit or with an object of known size .> be of (a specified size or degree) .> (measure something out) take an exact quantity of something .> a....
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....lant has to be efficiently communicated; and (iv) In addition to logging, the appellant was also required to perform ancillary activities such as perforation and puncturing. 27. What, therefore, transpires is that the activities undertaken by the appellant do not involve testing or analysis. It is the data procured by the appellant that is communicated to ONGC which, thereafter, independently analyses the same for determining the course of action. The function required to be performed by the appellant is strictly limited to the scope of measuring different parameters related to the oil rigs, and additionally, perforation, which has no relation to testing and analysis services. 28. The appellant has also placed reliance on the literature provided in respect of 'well-logging' and 'perforation' activities in the Dictionary of Petroleum Exploration, Drilling, & Production by Norman J. Hyne to submit that logging and perforation activity undertaken by the appellant is not towards any testing or analysis: Well Logging 1. Log 1) a record of rock properties in a well, usually made by a geologist or a service company. Some types of logs are sample, mud, drilling t....
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....shot in the casing or liner, cement, and producing formation by bullets or shaped-explosive charges to allow oil and/gas from a producing zone to flow into the well 29. It would be seen from the above technical literature that well logging is the process of recording measurements of various properties of rock and fluid at various depths in a well, and nothing more. It is also clear that perforation is a purely mechanical activity whereby holes/perforations are shot in the casing or liners. 30. After a careful analysis of the aforesaid factual and legal position, which had also arisen before a Division Bench of the Tribunal in the matter of the appellant in Schulmberger Asia, the Tribunal concluded that the activities cannot be classified under TTA services and the observation are: "33. It can, therefore, safely be concluded that the appellant was responsible for mobilizing equipment necessary for conducting the measurement/logging activities at the site and undertake perforation of the oil rigs casings. These activities do not involve any testing or analysis and accordingly, cannot be classified under 'technical testing and analysis service'." 31. The learned coun....
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....ategory of TTA services prior to 01.06.2007. 36. After placing reliance upon the following decisions of the High Court and the Tribunal in Aryan Energy (P) Ltd vs. Commissioner of Customs and Central Excise, Hyderabad 2009 (13) S.T.R. 42 (Tri.-Bang.), M/s. Aryan Coal Beneficiations Pvt. Ltd. vs. Commissioner of Service Tax, New Delhi 2013 (29) S.T.R. 74 (Tri. - Del.), M/s. Spectrum Coal and Power Ltd. vs. Commissioner of Central Excise, Raipur 2012 (28) S.T.R. 510 (Tri. - Del.), Indian National Shipowners' and M/s Malviya National Institute of Technology vs. Commissioner, Service Tax, Jaipur 2019 (28) G.S.T.L. 472 (Tri. - Del.), the Tribunal held in Schulmberger Asia that the activities carried out by the appellant w.e.f. 01.06.2007 would fall under mining service made taxable w.e.f. 01.06.2007 under section 65(105)(zzzy) of the Finance Act, as admitted to the department also, and so service tax under TTA services cannot be charged from the appellant prior to 01.06.2007. The relevant findings of the Tribunal are as follows: "44. In the instant case, the definition of TTA did not undergo any change when a new service 'in relation to mining' was introduced w.e.f. 01.06.20....