One of India’s busiest appellate courts, surrounded by piles of paper, legal briefs, and tax codes that no one outside the profession willingly reads, is where a dispute over what occurs miles beneath the ocean’s surface eventually made its way. This is a unique kind of irony. That’s essentially what happened with Western Geco International Ltd., a business whose Gurugram project office was conducting seismic surveys in deep water to gather geological data offshore, which is technically unglamorous. Regarding the legal implications of that work, the service tax authorities had different opinions.
The case, which was heard by the Principal Bench of CESTAT Delhi in November 2025, concerned whether or not offshore seismic data acquisition, which is carried out in deep sea and, in some ways, outside of India’s territorial comfort zone, should be subject to service tax. It turns out that the question of what qualifies as a taxable service when the majority of the actual work is taking place on a vessel somewhere over the continental shelf is genuinely complex. Western Geco’s project office was essentially the Indian arm of a British Virgin Islands entity. In the end, the demand was rejected by the tribunal, which was made up of Judicial Member Rachna Gupta and Technical Member P.V. Subba Rao. But it wasn’t easy to get there.
Over the past 20 years, it’s difficult to ignore how often India’s tax tribunals have had to deal with offshore operations. There is enough consistency in the pattern to imply a structural element. The tax authorities spend years determining the precise location of the taxable event and the applicable provision after foreign companies enter the country to perform specialized technical work, such as drilling, surveying, and mapping the seabed, frequently under contract with ONGC or comparable state entities.
The trajectory of the Transocean Offshore Deepwater Drilling cases in the early 2010s was strikingly similar. Before the Uttarakhand High Court ultimately resolved the case, these disagreements—which had nothing to do with data collection but rather employee taxation, specifically whether taxes paid by the business on behalf of foreign employees constituted a taxable perquisite—went all the way through ITAT Delhi.
Perhaps unintentionally, the Transocean cases exposed how ill-prepared India’s legal system is for the realities of offshore business. The Income Tax Act’s Section 10(10CC) was created with a particular type of arrangement in mind. When it was applied to a scenario where foreign drilling companies were paying taxes on behalf of workers who lived on rigs off the coast of Uttarakhand, or more accurately, were based in Mumbai while their employer operated deepwater units, courts had to perform interpretive work that the legislature hadn’t necessarily anticipated.
This longer story seems to include the CESTAT ruling on Western Geco. It appears that Indian courts are gradually, albeit grudgingly, developing a body of law that defines offshore as a commercial and jurisdictional reality rather than as a geographical abstraction. Every case contributes something. Whether the legislature will intervene to codify what the courts have been establishing case by case is still up in the air.
The sheer scope of technical operations that give rise to these disputes is what strikes an outsider. Seismic surveys conducted offshore are not easy tasks. While a project office on land files returns that result in a tax demand, ships are dragging sensor arrays across hundreds of kilometers of ocean floor and processing massive amounts of acoustic data. There is an almost theatrical gap between the legal argument and the actual world.
In the field of deepwater energy exploration, India requires foreign expertise. That’s just the truth. How that expertise is taxed will remain important.
