The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that service tax leviable on wireline logging, perforation and data processing services under “technical testing and analysis(TTA)” services.
M/s. Schulmberger Asia Services, the petitioner sought the quashing of the order passed by the Commissioner (Adjudication), Service Tax, Commissionerate confirming the demand of service tax with interest and penalty.
The issue that arises for consideration in this appeal relates to the classification of activities of wireline logging and perforation during the relevant period from 14.05.2003 to 31.03.2008 under the category of services defined under section 65(106) of the Finance Act, 1994 and made taxable under section 65(105)(zzh) of the Finance Act.
The appellant was providing services in the exploration and production sector to M/s. Oil and Natural Gas Corporation. These services include Wireline logging services, Perforation services and other mechanical jobs, Logging While Drilling services and Measurement While Drilling services.
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. The appellant contended that for performing these activities below the ground, it has to deploy sophisticated electronic tools which can work in hostile environments with extreme pressures and temperatures. These tools are called logging tools.
The activity of wireline logging involves the systematic gathering of measurements of characteristics of the underground rock formations and strata traversed by the cased and open holes drilled by the customers. This activity is performed by the deployment of logging tools on wires in the holes. The measurements are transmitted uphole via an electro-mechanical cable.
A two-member bench comprising Justice Dilip Gupta, President and Ms Hemambika R Priya, Member (Technical) observed that the appellant had repeatedly informed the department from 23.12.2004 that before 01.06.2007 it had not been discharging service tax on wireline logging, perforation and data processing services under the category of TTA services and by a letter dated 25.10.2007 the appellant had also informed the department that it had started paying service tax on mining services when it was introduced w.e.f. 01.06.2007.
Yet, the show cause notice was issued to the appellant only on 23.10.2008. Thus, the extended period of limitation could not have been invoked in the facts and circumstances of the case.
While allowing the appeal, the CESTAT set aside the impugned order dated 28.08.2012 passed by the Commissioner.
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