By TIOL News Service

MUMBAI, OCT 06, 2014: THE appellants are providing the following services to ONGC -

(a) Providing equipment and tools for measuring/reading of sub-surface data.

(b) Providing manpower to operate these technical equipment and machines.

(c) The data is read and recorded onto magnetic tapes while lowering the equipment into the sub-surface.

(d) Physically and manually undertaking the logging while drilling activity.

(e) The technical analysis and interpretation of the data recorded on to the magnetic tapes is done by ONGC and not appellant.

They paid service tax on the entire activity under the category of Consulting Engineer Serviceand the same was reimbursed by ONGC.

Later, advice was obtained by ONGC and when they were told that the activity undertaken by the appellant does not qualify as "Consulting Engineer" Service. So, ONGC recovered the entire amount of service tax paid to appellant in subsequent invoices and on the said advice obtained by ONGC, appellant filed refund claim of service tax paid during the period from May 2003 to October 2003.

The adjudicating authority held that the appellant had rightly paid the service tax and, therefore, they are not entitled for refund claim. This order was appealed but the Commissioner(A) held against the appellant. At this stage ONGC participated in the proceedings and, therefore, the impugned order was served on ONGC. Consequently, they too are in appeal before the CESTAT. The preliminary objection by the AR that the appeal by ONGC was not maintainable was set aside in the view of the above factual situation.

Before the CESTAT the appellant submitted that they are neither a qualified engineer nor an engineering firm and, therefore, they do not qualify as Consulting Engineer. Inasmuch as they are not required to pay service tax, which they paid wrongly, the provisions of Section 11B of the CEA, 1944 are not attracted; limitation does not apply and in view of the facts enumerated bar of unjust enrichment is not applicable.

ONGC submitted that bar of unjust enrichment is not applicable in the facts of the case and so refund be sanctioned to the appellant.

The AR submitted that the service tax has been correctly paid and in the alternative relying on the decision in CCE Goa v. Andrews Telecommunications India P. Ltd. - 2012-TIOL-1137-CESTAT-MUM it is pleaded that the refund claim is barred by limitation. Moreover, bar of unjust enrichment is also applicable as after issuing invoice, payment was received from ONGC andalthough ONGC recovered the same in subsequent invoices, it does not come in way for passing the bar of unjust enrichment.

The Bench observed -

++ On going through the scope of work, we find that the activity undertaken by HOSI is in nature of executing the job. HOSI is not providing any technical assistance or consultancy service to ONGC as they are not analyzing any data collected by them. Their mere job is to provide data on hard copy to ONGC for their consideration. In these circumstances, the HOSI is neither providing any consultancy or technical assistance. Further, we find that HOSI is neither a professionally qualified engineer nor they are an engineering firm during the relevant time as per the definition of "Consulting Engineer" under Section 65(31) of the Finance Act, 1994. By merely employing an engineer, it does not become an engineering firm. Therefore, on merits, we hold that the activity undertaken by the HOSI do not qualify under the category of Consulting Engineer Service. Therefore, HOSI is not required to pay service tax in this case.

++ Both the lower authorities have not considered the issue of limitation as well as unjust enrichment. Therefore, in the interest of natural justice, the matter needs examination at the end of the adjudicating authority to decide the issue of limitation and unjust enrichment.

The Appeals were disposed of by way of remand.

(See 2014-TIOL-1917-CESTAT-MUM)