- (1.) This appeal by the Hindustan Petroleum Corporation Ltd. ('HPCL') is directed against the order dated 14th July, 2015 passed by the Customs, Excise and Service Tax Appellate Tribunal ('CESTAT') in the stay application in Appeal No. ST/59270-CU [DB] of 2013 filed by HPCL before CESTAT seeking waiver of the pre-deposit and stay of further proceedings pursuant to the adjudication order dated 10th May, 2013 passed by the Commissioner of Central Excise ('CCE') confirming a service tax demand of Rs.1,36,15,903/- apart from interest and penalties.
(2.) The basis of the demand of service tax on HPCL is an agreement dated 31st October, 2007 entered into between HPCL and Indraprastha Gas Ltd. ('IGL') for distribution of Compressed Natural Gas ('CNG') through the HPCL owned/leased retail outlet in accordance with the terms and conditions set out in the said agreement. The question that arose in the proceedings before the CCE was whether in terms of the said agreement it could be said that HPCL was providing Business Auxiliary Services ('BAS') to IGL with regard to the sale of CNG through the retail outlet of HPCL. The CCE answered the question prima facie in the affirmative and held that the activity of HPCL in marketing or sale of CNG belonging to IGL, would fall within the ambit of Section 65 (105) (zzb) read with Section 65 (19) of the Finance Act, 1994 and, therefore, exigible to service tax.
(3.) Before the CESTAT, in support of its plea that there should be complete waiver of pre-deposit, HPCL relied on the final judgment dated 4th June 2014 passed by the Mumbai Bench of the CESTAT in Bharat Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. v. Commissioner of Service Tax, Mumbai 2014 TIOL-1114 (CESTAT-Mumbai) (hereafter referred to as the 'BPCL v. CST, Mumbai' case). In the said final judgment in the 'BPCL v. CST, Mumbai' case, the Coordinate Bench of the CESTAT held that since HPCL and Bharat Petroleum Corporation Ltd. ('BPCL') were themselves buying the CNG from Mahanagar Gas Ltd. ('MGL'), the question of rendering services to MGL by way of marketing the CNG did not arise. Inter alia, it was held that 'the contention of the learned AR that private parties are paying Service Tax under the category of Business Auxiliary Service on the same activity, therefore, the Appellant are required to pay service tax is not acceptable as in the case of private parties, the invoices on the customers were raised by M/s MGL directly and private parties are receiving commission and there is no transactions of principal to principal basis.';