DEEP INDUSTRIES LTD. Vs. STATE OF GUJARAT

JUDGEMENT

(1.) By this petition under Article 226 of the Constitution of India, the petitioners have challenged the order dated 25.1.2016 passed by the Gujarat Value Added Tax Tribunal (hereinafter referred to as "the Tribunal") in Second Appeal No.258 of 2016 as well as the orders of the authorities confirmed by the Tribunal. The petitioners further seek a declaration that the levy of tax under the Gujarat Value Added Tax Act, 2003 (hereinafter referred to as "the GVAT Act") on the work over service contracts entered into by the petitioners with clients, such as, ONGC, is beyond the legislative competence of the State of Gujarat and therefore, without jurisdiction, bad and illegal. Alternatively, the petitioners seek a declaration that the levy of tax under the GVAT Act on the work over rigs imported qua the work over service contracts is in any case violating Article 286 of the Constitution of India read with section 5(2) of the Central Sales Tax Act, 1956. Alternatively, the petitioners seek a direction to the Union of India to transfer the amount of service tax collected on the work over service contracts towards the alleged VAT liability on the transactions as determined by the authorities of the State of Gujarat.

(2.) The facts as averred in the petition are that the petitioners are engaged in providing services such as, gas compression and work over services to companies such as, Oil and Natural Gas Corporation Ltd. (hereinafter referred to as "ONGC"), who are engaged in exploration of oil and natural gas. The petitioners are duly registered under the VAT Act as well as under the Finance Act, 1994 (hereinafter referred to as "the Finance Act") for the purpose of discharging service tax liability. The petitioners entered into contracts with customers for provision of services. Insofar as the work over services are concerned, the contract specifically provides that the services would be provided by the employees of the petitioners by using work over rigs specifically imported for the purpose of the contract from vendors approved by the customer.

(3.) It is the case of the petitioners that all the contracts relating to work over services during the concerned year are in pari materia with the contract annexed at Annexure "B" to the petition, the salient features whereof are as follows: