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Gujarat State Petroleum Corpn. Ltd V/S C.C.E. & S.T., Ahmedabad-III

    Final Order No. A/12734/2017-WZB/AHD in Appeal No. ST/185/2008

    Decided On, 22 September 2017

    At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Ahmedabad

    By, THE HONORABLE JUSTICE: DR. D.M. MISRA
    By, MEMBER AND THE HONORABLE JUSTICE: DEVENDER SINGH
    By, MEMBER

    For Petitioner: S.J. Vyas, Advocate And For Respondents: N. Satwani, AR



Judgment Text


1. This is an appeal filed against OIA No. 72/2008(Ahd-III)/CE/KCG/Commr(A), dated 11-8-2008 passed by the Commissioner (Appeals) of Central Excise, Ahmedabad-III. Briefly stated the facts of the case are that on the basis of scrutiny of Balance Sheets for the financial year 2001-2002 to 2003-2004, it was alleged that the appellant had rendered 'Management Consultant

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Service' to the Joint venture company and failed to pay Service Tax amounting to Rs. 1,44,187/-. Consequently, demand notice was issued to them on 22-9-2006, for recovery of the said amount with interest and proposal for penalty. On adjudication, the demand was confirmed with interest and penalty. Aggrieved by the said order, they filed appeal before the ld. Commissioner (Appeals), who in-turn, rejected their appeal. Hence, the present appeal.

2. Ld. Advocate Shri S.J. Vyas for the appellant has submitted that the appellant, a Government of Gujarat undertaking, had entered into Joint operating agreement with M/s. Niko Resources, Canada for oil field exploration and production. Under the said agreement, inter alia, M/s. Niko Resources was required to submit a weekly report of all oil/gas produced from the Contract Area and a monthly report of all expenses including capital expenses incurred. It is his contention that M/s. Niko Resources instead of carrying out the said job of preparation of statistical reports, entrusted it to the appellant against consideration. It is his contention that preparation of statistical report which was the responsibility of M/s. Niko Resources, under the agreement, cannot be construed as provision of Management Consultancy Services by the Appellant to the joint venture company, as per the definition of 'Management Consultancy Service' prescribed under the Finance Act, 1994. Thus services of preparation of statistical reports data on behalf of M/s. Niko Resources, Canada cannot be subjected to Service Tax.

3. Ld. AR for the Revenue reiterated the findings of the ld. Commissioner (Appeals).

4. We find that the appellant and M/s. Niko Resources, Canada had entered into a Joint Operation Agreement (JOA) for oil resources exploration and production. Under the said agreement, M/s. Niko Resources, was required to supply to the appellant weekly report on oil and gas produced and also a monthly report on various expenses. Since, M/s. Niko Resources could not prepare the statistical reports, against payment of monthly charges, assigned the job to the appellant for preparation of such reports. The meaning of "Management Consultant" as defined under the Finance Act, 1994 at the relevant time reads as follows:-

"Management Consultant" means any person who is engaged in providing any service, either directly or indirectly, in connection with the management of any organisation in any manner and includes any person who renders any advice, consultancy or technical assistance, relating to conceptualising, devising, development, modification, rectification or upgradation of any working system of any organisation."
On a plain reading of the aforesaid definition, it is difficult to appreciate that preparation of statistical report by the appellant could be construed as providing any service in connection with the management of the company, hence, would come under the scope of aforesaid definition of management consultant. Since, on merit the levy of Service Tax on the services provided by the Appellant cannot be sustainable, therefore, ancillary issues, namely, imposition of penalty, limitation etc., become move of academic, accordingly not dealt with. In the result, the impugned order is set-aside and the appeal is allowed with consequential relief, if any, as per law
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