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ST – When the department has accepted the order passed by them on a particular issue they cannot challenge for a subsequent period on the very same issue: CESTAT

2019-TIOL-2165-CESTAT-MAD

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, CHENNAI

ST/Misc./41512/2017 & ST/188/2011

Arising out of Order-in-Original No. 20/2010, Dated: 11.11.2010
Passed by the Commissioner of Central Excise, Chennai – III

Date of Hearing: 18.03.2019
Date of Decision: 18.03.2019

M/s MOHABIR ENTERPRISES

Vs

COMMISSIONER OF GST AND CENTRAL EXCISE
CHENNAI SOUTH

Appellant Rep by: Ms Kanthi Visalakshmi, Adv.
Respondent Rep by: Shri B Balamurugan, AC (AR)

CORAM: Sulekha Beevi C S, Member (J)
Madhu Mohan Damodhar, Member (T)

ST – Assessee is registered for various services with Department – During audit, it was noticed that assessee had entered into an agreement with M/s. Shivani Oil and Gas Exploration Services Ltd. and M/s. Sai Engineering and Drilling for providing Shot Hole Drilling and 3D seismic job services – M/s. Shivani Oil and Gas Exploration Services Ltd. had sub-contracted the shot hole drilling and 3D seismic job services to assessee – Similarly, M/s. Sai Engineering and Drilling had sub-contracted shot hole drilling by rotary type manual drilling sets and seismic job services for 2D seismic survey in Crew B in Bihar to the assessee – According to department, the activities done by assessee under the contracts would fall under the category of Survey and Exploration of Mineral Service and is subject to levy of service tax – From the activities explained by assessee it can be seen that these activities have nothing to do with Survey & Exploration of Mineral Service – The assessee have undertaken mainly the preparation of camps mobilization and also upkeep and maintenance of these camps – The Commissioner (A) for the period from 25.4.2006 to 20.12.2007 has analyzed the very same issue in detail and held that the activities does not fall under Survey & Exploration of Mineral Service – It was held that activity of assessee is not in the nature of seismic services and collection/processing, interpretation of data and drilling or testing in relation to survey and exploration – The CBEC vide its Circular No. 80/10/2004-ST has clarified that the service tax under this category would be limited to the services rendered in relation to Survey and Exploration only and not on the activity of actual extraction after the survey and exploration is complete – The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax – The activity undertaken by assessee is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under definition of Survey & Exploration of Mineral Services – The Tribunal in assessee’s own case had remanded the matter to the adjudicating authority to relook into the question whether the activity falls within the category of Survey & Exploration of Mineral Services – For an earlier period, Commissioner (A) has held that the activities undertaken by assessee would not fall under the category of Survey & Exploration of Mineral services and the department has not filed any appeal against that order – Assessee has relied upon the decision in the case of Marsons Fan Industries – 2008-TIOL-59-SC-CX to argue that when the department has accepted the order passed by them on a particular issue they cannot challenge for a subsequent period on the very same issue – The issue has been decided in favour of the assessee for the previous period – The department cannot then agitate the matter – Thus, the demand cannot sustain, impugned order is set aside: CESTAT

Appeal allowed

Case laws cited:

MOHABIR ENTERPRISES – 2019-TIOL-281-CESTAT-MAD… Para 3

Marsons Fan Industries Vs. Commissioner of Central Excise, Calcutta – 2008-TIOL-59-SC-CX… Para 5.4

FINAL ORDER NO. 40572/2019

Per: Bench:

Brief facts are that the appellants are registered for various services with the Department. During the internal audit, it was noticed that appellant had entered into an agreement with M/s. Shivani Oil and Gas Exploration Services Ltd., New Delhi and M/s. Sai Engineering and Drilling, Vijayawada for providing Shot Hole Drilling and 3D seismic job services. M/s. Shivani Oil and Gas Exploration Services Ltd.had sub-contracted the shot hole drilling and 3D seismic job services to the appellant. Similarly, M/s. Sai Engineering and Drilling had sub-contracted shot hole drilling by rotary type manual drilling sets and seismic job services for 2D seismic survey in Crew B in Bihar to the appellant. According to department, the activities done by the appellant under the above contracts would fall under the category of Survey and Exploration of Mineral Service and is subject to levy of service tax. Show Cause Notices were issued proposing for demand of the short-paid service tax along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand along with interest for the period January 2008 to December 2008 and also imposed penalty under section 76 of the Finance Act, 1994. Hence this appeal.

2. On behalf of the appellant ld. counsel Ms. Kanthi Visalakshi submitted that the activities undertaken by the appellant does not fall under the category of Survey and Exploration of Mineral Service. In reply to Show Cause Notice itself they had explained the activity undertaken by them under the contracts. Appellants provide services only in respect of camp mobilization and demobilization, camp establishment and maintenance, cable laying, shooting and shot hole drilling centering around oil and gas areas. No service in respect of the area dealing with mineral has ever been provided by the appellant warranting levy of service tax under the said category. Further that appellants are only sub-contractors of M/s. Shivani Oil and Gas Exploration Services Ltd. and M/s. Sai Engineering and Drilling to whom the service tax liability falls as the main contractor and not the appellant. She relied upon the decision of the Commissioner (Appeals) in their own case vide Order in Appeal No. 13/2009 (M-ST) dated 30.4.2009 to argue that for the earlier period, the Commissioner (Appeals) had set aside the demand observing that the activity of the appellant does not fall under the definition of Survey & Exploration of Mineral services.

3. The ld. AR Shri B.Balamurugan supported the findings in the impugned order. He submitted that the appellants have been undertaking shot hole drilling activities and these would fall under the category of Survey & Exploration of Mineral Services. Further, in the appellant’s own case for a different period as reported in 2019 (20) GSTL 107 (Tri. Chennai) = 2019-TIOL-281-CESTAT-MAD, the Tribunal has remanded the matter to the adjudicating authority to look into the question whether the activities fall within the category of Survey & Exploration of Mineral Services.

4. Heard both sides.

5. The dispute is as to whether the activity undertaken by the appellant would fall under the category of Survey & Exploration of Mineral Service. In the reply to the Show Cause Notice as well as in the grounds of appeal, the appellants have contended that the activities carried out by them does not fall under the said category of services.

5.1 For better appreciation, the definition of Survey & Exploration of Mineral Services is reproduced as under:-

Section 65(105)(zzv):

“Taxable service means any service provided or to be provided to any person by any other person in relation to survey and exploration of minerals”

Section 65(104a) defines as follows:-

“Survey and Exploration of Mineral’ means geological, geophysical or other prospecting, surface or sub-surface surveying or map making service, in relation to location or exploration of deposits of mineral, oil or gas”.

5.2 As per the grounds of appeal, it is stated that their activities are camp mobilization and demobilization such as (i) camp establishment (ii) preparation of camp ground (iii) construction of sheds, baths, toilets etc. (iv) bunkhouses jacking up (v) electrical wiring and fitting (vi) erection of water tank and (vii) preparation of internal roads and paths. So also the job undertaken camp maintenance is in the nature of daily housekeeping of all living and office bunk houses, sheds etc., round the clock assistance in camp offices, assistance of maintenance of equipment, generators, air conditioning unit, vehicles etc. loading and unloading of materials, equipments etc. daily supply of drinking and potable water etc. regular upkeep of camp ground, maintenance of sanitation and hygiene. They provide loading of survey equipment at camp site and transportation of the same to different lines and station to station after completion of the day’s work bringing them back to the camp site properly without any damage. They undertake cutting, clearing of undergrowth along the line and making approach road/foot track, painting the ranging rods. They engage labourers to drill the land upto a depth stipulated by the officials of the said ONGC. This activity is known in the commercial parlance as shot hole drilling which is manually done by the unskilled labourers and is nothing to do with shot hole drilling which is undertaken in exploration of mineral activities.

5.3 From the activities explained by the appellant it can be seen that these activities have nothing to do with Survey & Exploration of Mineral Service. Appellants have undertaken mainly the preparation of camps mobilization and also upkeep and maintenance of these camps. The Commissioner (Appeals) for the period from 25.4.2006 to 20.12.2007 has analyzed the very same issue in detail and held that the activities does not fall under Survey & Exploration of Mineral Service. It was held that activity of the appellant are not in the nature of seismic services and collection/processing, interpretation of data and drilling or testing in relation to survey and exploration. The CBEC vide its Circular No. 80/10/2004-ST dated 10.9.2004 has clarified that the service tax under this category would be limited to the services rendered in relation to Survey and Exploration only and not on the activity of actual extraction after the survey and exploration is complete. The transport, refining, processing or production of the extracted products would also be out of the ambit of service tax.

5.4 On these lines of clarification issued by Board, we can safely conclude that the activity undertaken by the appellant is in the nature of mobilization of camps, upkeep and maintenance of camps and such other services that would not fall under the definition of Survey & Exploration of Mineral Services. While arriving at such conclusion, we also take note of the fact that the Tribunal in the appellant’s own case cited supra, had remanded the matter to the adjudicating authority to relook into the question whether the activity falls within the category of Survey & Exploration of Mineral Services. For an earlier period, the Commissioner (Appeals) has held that the activities undertaken by the appellant would not fall under the category of Survey & Exploration of Mineral services and the department has not filed any appeal against that order. The ld. counsel for the appellant has relied upon the decision in the case of Marsons Fan Industries Vs. Commissioner of Central Excise, Calcutta – 2008 (225) ELT 334 (SC) = 2008-TIOL-59-SC-CX to argue that when the department has accepted the order passed by them on a particular issue they cannot challenge for a subsequent period on the very same issue. In the present case, when the matter came up for hearing on 22.2.2019, the department had sought time for verifying whether any appeal was filed against the Order inAppeal No. 13/2009 (M-ST) dated 30.4.2009. Today, the ld. AR has not been able to confirm whether any appeal has been preferred by the department or not. Taking note of this aspect and also relying upon the decision in Marsons Fan Industries (supra), we are of the opinion that the issue has been decided in favour of the assessee for the previous period. The department cannot then agitate the matter. Thus, after appreciating the facts and following the decisions cited above, we are of the view that the demand cannot sustain. The impugned order is set aside. The appeal is allowed with consequential relief, if any.

6. The miscellaneous application filed by Revenue for change of cause title is allowed.

(Dictated and pronounced in open court)

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