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2023 Supreme(Online)(CESTAT) 1258
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, KOLKATA
EASTERN ZONAL BENCH : KOLKATA
REGIONAL BENCH - COURT NO.3
Excise Appeal No.76565 of 2018
(Arising out of Order-in-Appeal No.06/DIB/CE(A)/GHY/18 dated 23.01.2018 passed
by Commissioner(Appeals), Central Goods and Service Tax & Excise, Guwahati.)
M/s. Oil India Limited
(Duliajan, Dist.Dibrugarh, Assam-786602.)
…Appellant
VERSUS
Commissioner of Central Excise & Service Tax Dibrugarh
…..Respondent
(F-Lane, Milan Nagar, Dibrugarh-786003.)
APPEARANCE
Shri Krishna Rao, Advocate for the Appellant (s)
Shri K.Chowdhury, Authorized Representative for the Respondent (s)
CORAM: HON’BLE SHRI P.K.CHOUDHARY, MEMBER(JUDICIAL)
FINAL ORDER NO. 75087/2023
DATE OF HEARING : 24 February 2023
DATE OF DECISION : 14 March 2023
P.K.CHOUDHARY :
M/s OIL India Ltd. (‘the Appellant’) is engaged in the exploration
and production of Crude Oil and Natural Gas falling under Chapter 27
of the Central Excise Tariff Act, 1975. The Appellant entered into
arrangements with two foreign entities, incorporated abroad for the
receipt of certain services. The details of the same are in the
paragraphs that follow.
Excise Appeal No.76565 of 2018
2
National Oilwell Maintenance Company
2.
The Appellant entered into agreement dated 30.04.2014 with
National Oilwell Maintenance Company (‘NOMC’) for the provision of
‘cementing services for exploratory drilling’. The said contract at
‘Clause (iii) Schedule IV, General Notes for Table A’ provided that
Service Tax will be extra at OIL’s account but the liability for its
payment would be on the contractor (i.e. NOMC). In other words,
NOMC was to statutorily discharge Service Tax liability and was to then
reimburse itself of the same from the Appellant. NOMC is originally
based out of Doha located in Qatar.However, it setup an establishment
in India at Jodhpur and obtained Service Tax registration. NOMC raised
four invoices dated 1.08.2014, 1.09.2014, 1.10.2014 and 1.11.2014
on the Appellant. On 8.03.2016, it discharged Service Tax amounting
to Rs. 8,35,576/- and Rs. 7,87,669/- totalling to Rs. 16,23,245/-. The
Appellant also discharged Service Tax of these very amounts on
5.12.2014 and 6.01.2015 after entertaining a view that it was liable to
discharge Service Tax on reverse charge on the services received.
Both NOMC and the Appellant deposited Service Tax with the
Department. NOMC then followed up with the Appellant seeking a
reimbursement of the Service Tax deposited by it, in terms of the
aforesaid contract.
Haliburton Offshore Services Inc
3.
The Appellant entered into contract dated 12.08.2011 with M/s
Haliburton Offshore Services Inc (‘Haliburton’) for the provision of
‘Installation and Commission’ services. Like NOMC, the clause titled
‘Duties and Taxes’ of the said contract provided that Service Tax was
extra at OIL’s account. Haliburton was to discharge Service Tax and
then the Appellant was to reimburse it of the same. Haliburton raised
Invoice dated 19.04.2013 and discharged Service Tax. It deposited an
amount of Rs. 48,75,303/- on 3.05.2013, which was its total Service
Tax liability for the concerned period. Out of this an amount, Rs.
Excise Appeal No.76565 of 2018
3
9,88,184/- pertained to the services rendered to the Appellant.The
Appellant, being of the view that it was liable to discharge Service Tax
on the said transaction on reverse charge, discharged an amount of
Rs. 11,65,152/- on 5.12.2013. The appellant discharged an additional
amount of Rs. 1,76,968/- since the exchange rate changed from Rs.
58.55 per US Dollar in May 2013 to Rs. 62.30 per US Dollar in
December 2013. Haliburton wrote a detailed email dated 29.01.2014
wherein it explained that it had already discharged Service Tax on the
transaction in question. It followed up with the Appellant to reimburse
it of the same.
4.
The Appellant filed refund claim dated 16.11.2016 of the total
Service Tax amounting to Rs. 27,88,397/- paid by it on the aforesaid
transactions. Thereafter it received Show Cause Notice dated
12.04.2017 proposing to reject its claim on certain grounds. It was
alleged that the appellant failed the bar of unjust enrichment. It was
also alleged that, there was no evidence of double payment and in any
event the refund claim filed was time barred. It seemed that the
amounts deposited by the Appellant and Haliburton did not match. The
Appellant
responded
to
the
same
vide
its
reply
dated
24.04.2017/17.05.2017, explaining its stand.
5.
Thereafter Order in Original dated 31.08.2017 was passed
against the Appellant by the Assistant Commissioner Central Goods
and Services Tax, Dibrugarh. It was noticed that the contractual
liability of payment of Service Tax was on the contractors. However,
curiously it was still observed that the Appellant paid Service Tax to
the Department, as per the agreements wilfully and not by mistake. It
was held that no evidence was submitted by the Appellant to establish
that Service Tax was reimbursed to the contractors by the Appellant.
Further it was observed that the accounting codes on challan paid by
the Appellant and Haliburton did not match. Moreover, it was observed
that NOMC took credit of output service provided and reversed it only
when there was an objection raised by the Department. Finally, it was
Excise Appeal No.76565 of 2018
4
observed that the email from M/s Haliburton came on 29.04.2014
seeking release of payment of Service Tax portion for invoice no.
99418507. Thus, the Appellant should have applied for refund within
the time frame stipulated in Section 11B of Central Excise Act. The
Appellant appealed against OIO dated 31.08.2017 before the
Commissioner (Appeals) Central Goods and Services Tax &Excise
Dibrugarh.
6.
The
Commissioner
(Appeals)
vide
in
Appeal
No.
06/DIB/CE(A)/GHY/18 dated 23.01.2018 dismissed the Appellant’s
appeal. The appellate authority relied on Section 68(2) of Finance Act,
1994 and Notification 30/2012 to hold that Service Tax was payable on
reverse charge by the recipient from entities located abroad and thus
the Appellant correctly discharged Service Tax. Reliance was further
placed on SNC Lavalin Inc. vs. Commissioner Service Tax, Delhi –
2013 (32) STR 376 to hold that a project office cannot be called a
permanent establishment of the company.However, this order is an
order granting interim stay and cannot be considered to have
precedential value. It was finally held that the Appellant erred in
relying on limitation period stipulated in Section 17(1)(c) of the
Limitation Act. To rely on the said limitation period, the Appellant
ought to have filed a civil suit and not before an authority exercising
powers under Finance Act, 1994 and Central Excise Act, 1944.
7.
Shri Krishna Rao, Ld. Advocate appeared for the Appellant and
Shri K. Chowdhury, Ld. Authorized Representative appeared for the
Revenue.
8.
The Ld. Advocate for the Appellant submitted that both NOMC
and Haliburton setup establishments in India, categorically took
Service Tax registration and discharged Service Tax on the services
rendered by them. They did so, correctly under Explanation 4 to
5
Section 65B(44) of the Finance Act, 1994 which provides that a service
provider operating through a branch, agency or representational office
in a territory is to betreated as having an establishment in that
territory. He relied on Nagarjuna Oil Corporation Ltd. vs. CCE
Puducherry [2017 (47) S.T.R. 96 (Tri. Chennai)] in support of the
said contention. He further relied on the judgment of Dinesh Textiles
vs. CCE Calicut –2019 (366) ELT 3 (SC) in support of the general
proposition that deeming fictions are to be carried to their logical end.
9.
It was further contended that the Appellant discharged Service
Tax under reverse charge, on the aforesaid transactions under a
mistaken apprehension. Since it was never liable to discharge Service
Tax to begin with, the amount paid by it under mistake of law, was
never a ‘tax’. That being so, all trappings that apply to a ‘tax’,
including that of limitation under Section 11B,were not applicable to
the Appellant’s refund claim and thus the Appellant’s claim ought not
have been rejected. He relied on several judgments including those
ofParijat Constructions vs. CCE, Nashik [2018 (9) G.S.T.L. 8
(Bom.)], KVR Constructions vs. CCE Bangalore [2010 (17)
S.T.R.
6
(Kar.)],
M/s
Credible
Engineering
Construction
Projects
Limited
vs.
Commissioner
of
Central
Excise,
Hyderabad-GST [Service Tax Appeal No. ST/ 30781/2081]
andOriental Insurance Company Limited vs. Commissioner of
Central Excise & Service Tax [Service Tax Appeal No. 51609 of
2016].
10.
It was also contended that the bar of unjust enrichment was
inapplicable in the present case. There was no allegation or finding
against the Appellant that the Appellant priced the crude oil extracted
by it in such a way that it also factored in the Service Tax paid by it on
reverse charge. In any case, no such inference was sustainable
because the price of crude oil is regulated by the Government based
on international crude oil prices. Reliance was placed on Circular No. P-
6
20012/11/2006-PP dated 01.05.2009 issued by the Ministry of
Petroleum & Natural Gas which provided that only Sales Tax and
Pipeline Transportation Charges are to be paid by the refineries (and
not Service Tax). The above concept was reiterated yet again in
Circular No. P-20012/11/2006-PP Volume 1 issued by Ministry of
Petroleum and Natural Gas dated 21.03.2011. The Crude Offtake Sales
Agreements between the Appellant and its subsequent buyers i.e.
Indian Oil Corporation Limitedand Numaligarh Refinery Limited, based
on the ratios of the aforesaid Circulars, also established that Service
Tax never formed part of the valuation mechanism. For instance,
clause
