Service Tax
TRT-2025-
Cestat Chennai
Date:-09-01-24
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 09 January 2024
Parties: M/s. Hardy Exploration and Production (India) Inc. Vs The Commissioner of GST & Central Excise
Facts –
- The Appellant, M/s. Hardy Exploration and Production (India) Inc., is into the business of exploration and production of crude oil and natural gas and has executed many Production Sharing Contracts ("PSC") with Government of India ("GOI") for exploration and development of various oil and gas blocks in India.
- The department was of the view that the production cost received as the consideration for the service is taxable under mining services and the consideration for activity of development is classifiable under ‘Survey and Exploration Services’. Accordingly Show cause notices were issued proposing to demand the Service Tax under mining services and survey and exploration services along with interest and penalties.
Issue –
- Whether the entitlement of cost petroleum and profit petroleum as per the Production sharing contract is a consideration for rendering ‘survey and exploration service’ and ‘mining services to government’?
Order –
- The Tribunal observed that the very same issue was considered by the Tribunal in the case of B.G. Exploration and Production India Ltd. Vs Commissioner of CST (Audit- I) 2020 (10) TMI 579 [CESTAT, Mumbai dt.11.06.2020 (BG-I). The Tribunal held that there is no service provider and service recipient relationship in the joint venture and the amounts in the nature of profit petroleum/cost petroleum/ cash calls are not consideration for services.
- The assessee was under bonafide belief that being a joint venture in which even the government is a participant, there is no element of rendition of service or payment of consideration falling within the scope of Finance Act, 1994. Further, the department has not been able to establish any positive act of suppression of facts on the part of assessee with intent to evade payment of service tax. For these reasons, the assessee succeeds on the issue of limitation also.
- In the result, the impugned order is set aside. The assessee appeal is allowed. The department appeal is dismissed.
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