In the matter of payment of Service Tax under the category of ‘Mining Services’ based on Circular by Central Government, the Bombay High Court directed the petitioners, International Association of Drilling Contractors (South Central Asia Chapter) and Anr, to file the matter before the Designated Officer.
The petitioner an association of drilling contractors is before the Court in the present proceedings assailing the Circular No. 80/10/2004-ST dated 17 September 2004 issued by the respondents on service tax leviable on “survey and exploration of minerals”. The petitioners have contended that by virtue of the impugned circular the services of prospecting of minerals are now made to fall within the ambit of taxable entry under Section 65(105) (zzv) of the Finance Act,1994.
The petitioner has contended that its members were awarded contracts for drilling work by ONGC and Reliance Industries Ltd. which in no manner can fall within the ambit of “survey and exploration of minerals” as defined.
The contention is that by virtue of the circular, the ambit of the provision itself is sought to be expanded and which is not the intention of the legislature from the plain reading of the provision. There are other issues as urged, including on the interpretation of the provision in view of the subsequent legislative amendments made in the year 2007 and 2008 respectively by the relevant Finance Acts of the said years.
The Senior Counsel, DB Shroff, who appeared for the petitioners has fairly stated that with effect from the year 2007 the members of the petitioners are being taxed under the heading mining services and accordingly Service tax is being paid. He has also fairly pointed out that only one member of the petitioner namely M/s. Transocean Offshore International Ventures Ltd. along with its group entities was issued a common show cause notice dated which the petitioners contend, was totally illegal.
A Division Bench comprising Justices GS Kulkarni and Jitendra Jain observed that “We may observe that except one member as noted by us hereinabove, the department also has not issued any show cause notice for almost 17 years to any of the petitioner’s members and the position as pointed out by Mr.Shroff that the petitioners are paying service tax being classified under ‘mining services’, has continued to operate.”
“In a petition which is filed by the association, it may not be appropriate for us to examine the validity of the impugned circular. The same is already subject matter of contention in the show cause notice issued to one of the petitioner’s member M/s. Transocean Offshore International Ventures Ltd., and it would be for such member of the petitioner, who would be entitled to raise all contentions in regard to the circular by raising all permissible contentions in law and on facts. If such contentions are raised, certainly they fall for consideration of the Designated Officer who would, if at all, is to adjudicate the show cause notice” the Court concluded.
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