Service Tax - Delhi vs Schlumberger Asia Services Ltd

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 3

SERVICE TAX APPEAL NO.59448 OF 2013

[Arising out of Order-in-Original No.65/GB/2013 dated 12.04.2013 passed by the
Commissioner (Adjudication) Service Tax, New Delhi]

Commissioner of Service Tax,
Appellant
Commissionerate Delhi


Vs.



M/s. Schlumberger Asia Services Ltd Respondent
th
14 Floor, Tower-C, Building No.10,
DLF Cyber City, Phase-II,
Gurgaon-122002


Appearance:
Present for the Appellant: Shri N.K. Singh, Authorised Representative
Present for the Respondent: Shri B.L. Narasimhan and Shri Kunal Aggarwal,
Advocates


CORAM:
HON'BLE MR. AJAY SHARMA, MEMBER ( JUDICIAL )
HON’BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL)

Date of Hearing: 05.10.2026
Date of Decision:21.10.2026

Final Order No. 51622/2026

HEMAMBIKA R. PRIYA:
1
The present appeal has been filed by the Revenue against the
Order-in-Original No.65/GB/2013 dated 12.04.2013 passed by the
Commissioner (Adjudication) Service Tax, New Delhi, wherein the
demand of service tax of Rs.2,91,50,169/- was confirmed.

1. the Appellant

2


2. The brief facts are that the Respondent have centralized service
tax registration, and are engaged in rendering taxable services of
Commercial Training or Coaching, Technical Inspection and
certification, Commissioning or Installation Service, Maintenance or
Repair Service, Goods Transport Agency andMining Service as defined
under Section 65 of the Finance Act, 1994. The Respondent filed their
ST-3 returns for the period April, 2008 to September, 2008 and
October, 2008 to March, 2009 on 13.08.2009. The Respondent filed
revised returns for the said period on 11.11.2009. On scrutiny of the
said returns, it was noted that the Respondent had short paid/not paid
service tax to the tune of Rs.5,82,28,796/-. On further scrutiny the
department also observed that the respondent had deposited an
amount of Rs.1,67,77,259/- as arrears, but the Respondent did not
clarify as to which payment and which period this service tax payment
was related. The Respondent was asked to submit the
information/clarification vide letter dated 18.08.2010 & reminder letter
dated 07.09.2010. However, the respondent did not submit any reply.
Thereafter, Show Cause Notice dated 04.11.2010 was issued
demanding Service tax of Rs.5,82,28,796/- along with applicable
interest; proposing appropriation of Rs.1,67,77,259/- deposited by
them as arrears and alleging penalty under section 76 & 77 of the
Finance Act, 1994. The Show Cause Notice was adjudicated by the
Commissioner of Service Tax, New Delhi vide Order-in-Original
No.65/GB/2013 dated 12.04.2013, wherein adjudicating authority
confirmed the demand of Rs.1,80,33,349/- shown as deposit of
Arrears in the ST-3 Return and also confirmed Rs.19,53,949/- under

3


Technical Testing & Analysis service; imposed penalty of Rs.200/- per
day for the period during which such failure continues or amount
calculated at the rate of two percent per month on the tax not paid
(Rs.19,53,949/-), whichever is higher under Section 76 & Rs.5,000/-
under Section 77 of the Finance Act, 1994. Aggrieved by the said
order, the Department has filed the present Appeal before this
Tribunal.
3. Learned Authorised Representative for the Revenue submitted
that the adjudicating authority had erred in ascertaining the nature
and manner of the services rendered by the Respondent to M/s. ONGC
and holding that M/s. ONGC (service recipient) is liable to pay service
tax as it related to overseas study and paid by them under reverse
charge. He also submitted that scrutiny of contract revealed that the
Respondent was required to impart training for the course on
'Orientation program for Acreage Managers' to 75 managers of ONGC
in 3 batches, for a period of 7 weeks. Learned authorized
representative further submitted that the Respondent was required to
carry out the class room learning of the program in India for six
th
weeks, and for the 7 week there was the overseas visit of
participants to witness best practices in data acquisition, processing.
The cost of logistics and boarding/lodging of the participants in respect
of overseas visit was borne by the ONGC but the arrangement of the
same was to be done by the Respondent. Learned authorised
representative for the Revenue contended that the respondent
received consideration from M/s. ONGC for the whole service of the
training and not just for the overseas part of the training. In this

4


context, learned authorized representative contended that the
adjudicating authority has failed to discuss as to what services the
Respondent rendered to M/s. ONGC during the first six weeks of the
said training and what remuneration they received in lieu of that. He
also contended that the adjudicating authority had grossly erred in
taking cognizance of the email of the ONGC sent to the Respondent
certifying that M/s. ONGC had paid service tax on reverse charge basis
and demand of service tax from the respondent amounted to double
taxation. The impugned order had failed to ascertain the veracity of
the said emails by cross checking the challans, indicating that M/s.
ONGC had indeed paid the service tax on that account.
3.2 Learned authorised representative for the Revenue further
submitted that the adjudicating authorityhad also failed to take notice
of the contents of the invoice No. SASL-NEXT-ONGC-08-12-01 dated
th
10 Dec, 2008 raised by the Respondent to M/s. ONGC in respect of
the said contract wherein the Respondent had also been charging
service tax in respect of the service provided by them to M/s. ONGC in
relation to training imparted to Acreage Managers of M/s. ONGC. This
fact was contrary to their claim that M/s. ONGC had paid service tax
on Reverse charge basis. The adjudicating authorityhad erred in
agreeing with the submission of the Respondent that the services
provided by the Respondent to M/s. SEDCO, M/s.Triton and M/s.
Transocean during the impugned period were not liable to service tax
as the said services were provided in respect of wells situated in "non-
designated" areas beyond 12 nautical miles in the offshore areas and
that as per circular No. 36/4/2001 dated 08.10.2001, the provisions of

5


Chapter V of the Act had not been extended to the designated areas in
the continental shelf and Exclusive Economic Zone of India during the
relevant period. Learned authorized representative also submitted that
the adjudicating authority had erred in not appreciating the fact that
the CBEC Circular dated 08.10.2001 had been superseded by the
issuance of Notification No.01/2002-ST dated 01.03.2002 wherein the
marine boundaries of India were to be read, in tandem, with the
provisions of Territorial Waters, Continental Shelf, Exclusive Economic
Zones and other maritime Zones Act, 1976 as made applicable
through Notifications of the Government of India in the Ministry of
External affairs No. S.O. 429(E) dated 18.07.1986 and S.0.643 (E)
dated 19.09.1996 and in terms of which areas in the Continental Shelf
or in the Exclusive Economic Zone of India where the installation,
structures and platforms are situated and the areas extending up to
five hundred meters from the said installations structures and
platforms be the "designated areas" for the purpose of said sections.
He submitted that the adjudicating authorityhad also failed to
appreciate the fact that as per the various service agreements the
Respondent entered into agreements with M/s.SEDCO, M/s. Triton and
M/s. Transocean as contractors for M/s. ONGC to provide their mobile
drilling units to M/s, ONGC at their installations for the exploration of
oil & gas. The Respondent, as sub-contractor, had provided cementing
services for cementing and well stimulating along with cementing
equipments & cement additives required during drilling operations at
the said installations of M/s. ONGC. The services rendered by the
respondent in the capacity of a sub-contractor were rendered at the

6


installations of M/s. ONGC and the installations of M/s. ONGC in
various continental shelf and Exclusive Economic Zones of India were
in designated areas. Thus, the applicability of service tax in respect of
services in such designated areas was not in doubt and the services
rendered by the Respondent attracted service tax irrespective, of
whether they were rendered within 12 nautical miles of territorial
water or beyond but in the continental shelf or Exclusive Economic
Zones.
3.3 Learned authorised representative for the Revenue further
stated that the adjudicating authority had failed to take notice of the
contents of the Contract which the respondent had entered with M/s.
RIL. As per the contract, the Respondent was required to operate
Integrated Drilling Optimization Center, set up as Real Time Operation
Center at Navi Mumbai, which is located within the territory of India.
Even if the services were in relation to the Wells located beyond 12
nautical miles, the services were still liable to service tax as per
Notification No.01/2002-ST dated 01.03.2002. He also stated that as
per the contract, the services performed by the Respondent were
monitoring, tracking, planning, designing, documentation,
management training and development of RIL which was engineers in
relation to the exploration operations of M/s. RIL not at the Well sites,
but at RTOC at Navi Mumbai. Learned authorized representative
further stated that the adjudicating authority had also failed to take
notice of the notice of the contents of the invoice No. REL-D&M-RTOC-
April 2008 dated 13.04.2008 raised by the Respondent to M/s RIL in
respect of the said contract for the month of April, 2008 wherein the

7


Respondent had also been charging and collecting service tax in
respect of the service provided by them to M/s RIL. This fact was
contrary to their claim that they were not liable to tax as the services
in relation to Wells of M/s RIL was situated beyond 12 nautical miles of
territorial waters.
4. Learned counsel for the respondent submitted that the Show
Cause Notice was issued solely on the basis of reconciliation of figures
reflected in the ST-3 returns. The Department had alleged that the
Appellant had short paid service tax of Rs.5,82,28,796/- being the
difference between service tax reflected as payable and the service tax
reflected as paid in the returns. Thus, the foundation of the Show
Cause Notice was restricted to an alleged short-payment derived from
scrutiny of the returns and did not contain any specific allegation
disputing the nature, place, manner or taxability of any transaction.
He submitted that the present appeal filed by the Department is
entirely beyond the case made out in the Show Cause Notice.
Moreover, the grounds now urged in appeal are entirely unsupported
by any factual evidence on record. The Department was effectively
seeking to build an altogether new case at the appellate stage without
substantiating such allegations through relevant evidence. This is
demonstrated below:
4.1 As regard the Training services rendered to ONGC, learned
counsel for the respondent submitted that the Show Cause Noticehad
proceeded on the basis of figures disclosed in the ST-3 returns. In
response to the Show Cause Notice, SAL had submitted that tax of

8


Rs.24,65,870 was reflected as payable not but paid on account of
having been discharged by ONGC. Thus, in the Show Cause Notice,
there was no allegation concerning non-payment of training services
rendered in India. The Show Cause Notice did not lay any factual
foundation concerning the scope of the ONGC contract or any
bifurcation of services rendered in India and overseas. The grounds of
appeal have introduced a new allegation for the first concerning the
place of provision of training services to ONGC, which was beyond the
scope of the Show Cause Notice. Further, learned counsel for the
respondent submitted that in the appeal, the Departmenthas not
placed on record any documentary evidence or contractual material to
substantiate its assertion regarding non-payment of service tax on
training services rendered in India. In the absence of any factual
foundation in the Show Cause Notice and any supporting evidence in
the appeal proceedings, such allegations remain wholly
unsubstantiated and are liable to be rejected on this ground alone.
4.2 As regards the services provided in designated area, learned
counsel for the respondent stated that through the present appeal, the
Department had challenged the dropping of Rs.2,91,50,080 on the
ground that the impugned order had not verified whether services
were rendered by SASL within India or in the designated areas beyond
12 nautical miles from Indian landmass. He also stated that the
adjudicating authority had examined the demand proposed in the
Show Cause Notice and, upon verification of SASL's explanation for the
differences reflected in the ST-3 returns, dropped the demand. The
Department's challenge was not directed against the allegations

9


contained in the Show Cause Notice but sought to build a new case,
which was not inShow Cause Notice. Thus, the Department's appeal
traveled far beyond the four corners of the Show Cause Notice and
was liable to be dismissed on this ground alone. Learned counsel for
the respondent placed reliance on the following decisions:
2
i. Collector of Central Excise vs. Cellulose Products of India ,
ii. Principal Commr. of Cus., C.E. & S.T., Nagpur vs. Fabrimax
3
Engg. Pvt. Ltd.
4
iii. Commissioner of Customs, New Delhi vs. Tag Overseas
iv. C.C.E. & S.T., Ahmedabad-III vs. Banaskantha District Co-
5
op Milk Producers Union Ltd.
v. Amar Coach Builders vs. Commissioner of Central Excise,
6
Jalandhar ,
vi. Commissioner of Customs, Mumbai vs. Toyo Engineering
7
India Limited ,
8
vii. Associated Switch Gears and Projects Ltd. vs. State of UP
viii. Inox Leisure Limited vs. Commissioner of Service Tax,
9
Hyderabad ,

2. 2000(124) E.L.T. 1133 (Tribunal), affirmed by the Hon'ble Supreme
Court in 2001(127) E.L.T. A165 (S.C)
3. 2018 (359) E.L.T. 43 (Bom.)
4. 2018 (9) G.S.T.L. 282 (Tri.)
5. 2019(22) G.S.T.L. G.S.T.L. (Tri.-Ahmd.)
6. 2005(191) E.L.T. 621 (Tri. - Del.)
7. 2006(201) E.L.T. 513 (S.C.)
8. 2024(89) G.S.T.L. 188 (All.)

9. 2022(60) GSTL 26 (Tribunal- Hyderabad) affirmed in Commissioner of
Service Tax vs. Inox Leisure Limited, 2022(61) GSTL 342 (S.C.)

10


ix. Reckitt & Colman of India Ltd. vs. Collector of Central
10
Excise ,
11
x. Collector of Central Excise Vs. Texmaco Ltd.
xi. Commissioner of Central Excise, Bhubneshwar-I vs.
12
Champdany Industries Ltd.
4.3 Learned counsel for the respondent further submitted that the
Show Cause Notice was issued merely on the basis of differences
noticed in the ST-3 returns and did not contain any allegation
regarding non-payment of tax on training servicesrendered in India,
provision of services in designated areas of the Continental Shelf or
Exclusive Economic Zone, utilization of cementing equipment at ONGC
installations, or performance of services for Reliance in India. The
Department, having failed to lay the requisite factual foundation in the
Show Cause Notice, cannot subsequently seek to supplement or
improve upon its case through grounds taken in appeal. Thus, he
submitted that before proposing a demand, it was incumbent upon the
Department to examine the relevant transactions, identify the precise
taxable service involved, analyse the applicable statutory provisions
and thereafter allege how the activities undertaken by the Appellant
satisfied the ingredients of the charging provision. In the absence of
any attempt to demonstrate that the differential amount pertained to
taxable services falling under any specific taxable category, the
Department failed to discharge its burden of proof. Consequently, the

10.1996(88) E.L.T. 641 (S.C.)
11.1992(61) ELT 477 (Tribunal)
12 . 241 ELT 481

11


demand was unsustainable at its inception. Learned counsel for the
respondent placed reliance on the following decisions:
13
i. UOI Vs. Garware Nylons Ltd.
ii. Commissioner of Customs (Import), Mumbai Vs. Dilip
14
Kumar & Company .
15
iii. State of Madhya Pradesh Vs. Marico Industries Ltd.
iv. Coramandel Fertilizers Ltd . Vs. Commissioner of Central
16
Excise, Chennai
17
v. Shubham Electricals Vs. Commissioner ,
vi. R.V. Infrastructural Pvt. Ltd. Vs. Commissioner of Central
18
Tax, New Delhi
19
vii. Deltax Enterprises Vs. CCE, Delhi-l
viii. Rajmal Lakhichand Vs. Commissioner of Customs,
20
Aurangabad
ix. Hindustan Zinc Ltd. Vs. The Commissioner of Central
21
Excise, Udaipur

13. 1996(9) TMI 123 - Supreme Court
14. 2018 (361) ELT 577 (SC)
15. 2016(338) ELT 335 (SC)
16. 2009(13) STR 542 (Tri.-Chennai) affirmed in Commissioner Vs.
Coramandel Fertilizers Ltd. 2012(25) STR J126 (Mad.)
17. 2015(40) STR 1034 (Tri-Del) affirmed in Principal Commissioner Vs.
Shubham Electricals - 2016(42) S.T.R. J312 (Del.)
18. 2023-VIL- 1315-CESTAT-DEL-ST
19. 2018 (10) GSTL 392 (Tri. -Del.)
20. 2010(255) ELT 357 (Bom.) maintained by Hon'ble Supreme court of
India in 2012(278) ELT 577 (SC)
21. Final Order No. 51000/2022

12


x. CMS (India) Operations & Maintenance Co. (P) Ltd. Vs.
22
CCE, Puducherry .
4.4 Learned counsel for the respondent contended that for this
reason, the demand itself was not sustainable and consequently, the
Department’s appealis liable to be dismissed.
5. We have heard Shri N.K. Singh, learned Authorised
Representative for the Revenue and Shri B.L. Narasimhan, learned
counsel for the respondent assisted by Shri Kunal Aggarwal.
6. The learned counsel for the respondent has submitted that the
department had issued the show cause notice purely on the basis of
reconciliation of figures reflected in the ST3 returns. No specific
allegations, disputing, the nature, place, manner, or accessibility of
any transaction was made in the show cause notice. In this context,
we note that the appellant did not submit any documents when sought
by the department on the nature of services provided by them. We
find the same is noted in the impugned order in Para 4 wherein the
Commissioner has recorded as follows: -
“4. The party vide this Office C.No. DL-II/ST/R-
12/LAR/SAS/06/10/3311 dated 18.08.2010 and reminder 3654
was requested to submit the following information but the party
did not bother to submit any reply….”

In view of such lack of cooperation by the appellant who failed to
submit any documents as sought by the jurisdictional office, we are
unable to accept the submissions of the learned Counsel that the show
cause notice does not contain specific allegations, and the grounds

22. 2017-VIL-115-CESTAT-CHE-ST

13


taken up by the Department was not taken in the said notice. Hence,
we hold that the said notice is valid.
7. Learned Counsel has submitted before us that the respondent
had provided the services beyond the designated areas of 12 nautical
miles from the Indian landmass. He submitted that the adjudicating
authority had examined the demand and it was upon verification of
respondent’s submissions to explain the differences, had dropped the
demand. However, learned Authorised Representative has submitted
that the impugned order had erred in accepting the submissions of the
appellant without any documents. We note that no evidence has been
led before us to establish that the services were rendered beyond the
designated areas. In addition, we find that there is no discussion on
the various service agreements entered by the respondent had entered
with other service providers such as M/s SEDCO, M/s Triton and M/s
Transocean as contractors for M/s ONGC.
8. Further, on perusal of the facts of the case, we note that the
learned Authorised Representative has submitted that the training
program conducted by the respondent was for a period of seven weeks
for the Acreage Managers. The initial six weeks of the training was
carried out in a classroom which was within the taxable territory of
India. It was only in week seven that the trainees were taken
overseas. Hence, the service tax liability for the initial six weeks would
have to be examined. Further, we find that the impugned order has
failed to discuss the nature of services, the Respondent had rendered
in the first six weeks and what was the remuneration received in lieu

14


of the services provided. As regards the submissions that M/s ONGC
had paid the required tax on RCM, no evidence has been led before us
to accept the submissions. We are in agreement with the submissions
of the learned authorised representative for revenue that the
impugned order has failed to ascertain veracity of the emails and cross
verifying the same with the duty payment challans.
9. As regards the contract which the respondent had entered with
M/s. RIL, learned Authorised Representative has submitted that it was
to operate the Integrated Drilling Optimisation Centre in Navi Mumbai.
It has also been submitted that the impugned order had failed to take
notice of the contents of the invoice No. REL-D&M-RTOC-April 2008
dated 13.4.2008 where in the respondent had charged and collected
service tax in respect of the services provided by them. This fact is
contrary to their claim that they were not liable to tax as the services
were situated beyond the 12 nautical miles of the territorial waters.
10. We note that other than the assertion that the services were
provided beyond the designated area, no other evidence has been
placed before us to substantiate this claim. Hence, we are of the view
that it would be appropriate to give an opportunity to the respondent
to submit all the relevant documents before the adjudicating authority
in this regard to substantiate their claim that services were provided in
areas which were beyond the designated area.
11. In view of the above discussions, we hold that all these issues
need to be relooked into by the adjudicating authority. We direct that
the adjudicating authority may give an opportunity to the appellant to

15


submit all the relevant documents to substantiate their claim in respect
of their service tax liability. The appellant may also be given an
opportunity to be heard in person.
12. Consequently, we set aside the impugned order and allow the
appeal by way of remand.
(Order pronounced on 21.10.2026 )


(AJAY SHARMA)
MEMBER (JUDICIAL)



(HEMAMBIKA R. PRIYA)
MEMBER (TECHNICAL)














Archana