A.P. ENTERPRISES Vs. COMMISSIONER OF SERVICE TAX

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, we note that the ld. Commissioner of Service Tax has demanded service tax of over Rs. 1.4 crores from the appellants for the period 2004 -2006 by invoking the extended period of limitation. He has also demanded service tax of Rs. 1,82,003/ - towards the cost of Bentonite powder used by them for rendering the service in question. Penalties also have been imposed on the appellants under Sections 76 and 78 of the Finance Act, 1994. Interest on tax is also sought to be levied from the appellants under Section 75 of the Act for the delay in payment of service tax. The main demand is under the category of service in relation to "Survey and Exploration of Mineral, Oil and Gas" and the same is under Section 65(105)(zzv) of the Finance Act.

(2.) IT appears from the records that, under an Agreement entered into with ONGC & M/s. Geofizyka To -run, the appellants agreed to drill seismic shot holes in a part of Cauvery Basin, for which activity they collected payments from M/s. GT and M/s. ONGC. It is on these amounts that the above demand of service tax has been raised. It is the case of the appellants that whatever activity was performed by them was performed in their capacity as subcontractors of M/s. GT and, therefore, any service tax was not payable by them.

(3.) AFTER hearing the ld. counsel and the ld. SDR, we find that plea of revenue -neutrality raised by the appellants is unassailable and, therefore, waiver of pre -deposit and stay of recovery are liable to be granted in this case.