2025-VIL-1919-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax – Section 66A of Finance Act, 1994 – Performing of work outside India – Tax liability – Western Geco, British Virgin Islands/headquarters of Appellant had entered into contracts with Oil and Natural Gas Commission (ONGC) and Reliance Industries Ltd (RIL) to conduct seismic survey of sea beyond 12 nautical miles from Indian land mass, analyse data and submit reports which help them in finding and drilling for oil and gas – Appellant/Western Geco Gurugram had paid service tax on 4% of total value of contracts received for data analysis done in Mumbai office – Department issued show cause notice to Appellant by proposing demand of Service Tax on remaining 96% of basic cost – Commissioner confirmed demand as proposed in show cause notice – Whether Appellant is liable to pay Service Tax on entire value of contract when 96% of work was performed outside India – HELD – Section 66A of the Act states that if service was rendered by a person outside India, service recipient had to pay tax as if he had rendered the service. Contracts for service were entered into by Western Geco, BV Islands with ONGC and RIL and consideration was paid in US dollars. Nothing is brought on record to show that any contracts were entered into by Gurugram or Mumbai project offices of Western Geco. There was no lis between ONGC and Western Geco Mumbai or Western Geco Gurugram. Project offices of Western Geco in Mumbai and Gurugram and its headquarters in BV Islands were separate persons as per Section 66A of the Act and the service provider was Western Geco BV Islands which was not located in India. Services performed outside territorial waters of India are clearly not exigible to service tax, because Finance Act does not extend to places outside India. Liability to pay service tax could not have been fastened on Appellant which neither provided any service nor received any consideration. Charge of service tax was only on ONGC and RIL as per Section 66A of the Act. Demand confirmed against Appellant cannot be sustained and needs to be set aside – Appeal allowed
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