Case Details: Nikoresources (NELPV) Ltd. Versus Commissioner of Customs, Chennai (2025) 27 Centax 227 (Tri.-Mad)
Judiciary and Counsel Details
- S/Shri P. Dinesha, Member (J) & M. Ajit Kumar, Member (T)
- Shri Vishal Agrawal, Adv., for the Appellant.
- Shri M. Selvakumar, Authorized Representative, for the Respondent.
Facts of the Case
The assessee, an oil exploration company, entered into a contract with a foreign entity for the provision of a drilling rig along with operational personnel to conduct oil exploration activities in the Cauvery Block, India. The agreement covered various services, including rig operation, project management, campsite services, and manpower planning. The Revenue classified these services as “Consulting Engineer Service” under Section 65(31) read with Section 65(105)(g) of the Finance Act, 1994, and issued a service tax demand along with interest and penalties. The assessee challenged this classification before the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), contending that the contract was for operational services and not for consultancy or technical advisory functions.
CESTAT Held
The Hon’ble CESTAT held that the services provided by the foreign entity did not fall within the ambit of “Consulting Engineer Service” as defined under Section 65(31) of the Finance Act, 1994. The tribunal observed that consulting engineers render advisory or consultancy services, whereas the personnel deployed under the contract were engaged in executing operational functions, such as drilling and mechanical work. It was further held that the dominant intention of the contract was the provision of operational services, and the Revenue failed to establish that the services were advisory in nature. Consequently, the service tax demand, along with interest and penalties, was set aside, and the appeal was allowed in favour of the assessee.
List of Cases Cited
- Basti Sugar Mills Co. Ltd. v. Commissioner — 2007 (7) S.T.R. 431 (Tribunal) — Relied on [Para 7]
- CIT v. Bharti Cellular Ltd. — (2008) 175 Taxmann 573 (Delhi) — Relied on [Para 7]
- Commissioner v. Jyoti Limited — 2022 (64) G.S.T.L. 129 (S.C.) — Referred [Para 3.1]
- Commissioner v. Northern Operating Systems Pvt. Ltd. — 2022 (61) G.S.T.L. 129 (S.C.) — Relied on [Para 4]
- Commissioner v. VICCO Laboratories — 2005 (179) E.L.T. 17 (S.C.) — Relied on [Para 5]
- Dunlop India Ltd. v. Union of India — 1983 (13) E.L.T. 1566 (S.C.) — Relied on [Para 5]
- Jyoti Ltd. v. Commissioner — 2008 (9) S.T.R. 373 (Tri. – Ahmd.) — Referred [Para 3.1]
- Kerala SEB v. Kurien E. Kalathil — (2000) 6 SCC 293 — Relied on [Para 4]
- Rolls Royce Industrial Power (I) Ltd. v. Commissioner — 2006 (3) S.T.R. 292 (Tribunal) — Referred [Para 3.1]
- Suzlon Windfarm Services Ltd. v. Commissioner — 2014 (33) S.T.R. 65 (Tribunal) — [Para 3.1]
- Union of India v. Garware Nylons Ltd. — 1996 (87) E.L.T. 12 (S.C.) — Relied on [Para 5]
- Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd. — 2018 (10) G.S.T.L. 401 (S.C.) — Referred [Para 3.1]
