GAIL INDIA LTD. Vs. COMMISSIONER OF C. EX. & S.T.
LAWS(CE)-2015-2-65
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on February 23,2015

Gail India Ltd. Appellant
VERSUS
Commissioner of C. Ex. And S.T. Respondents

JUDGEMENT

G. Raghuram, J. (President) - (1.)ASSESSEE has preferred this appeal against the impugned adjudication order dated 15 -7 -2013 passed by Commissioner, Central Excise & Service Tax, LTU, New Delhi. The order confirms Service Tax demand of Rs. 54,45,99,527/ - apart from penalty and interest thereon on the ground that the appellant had provided "transport of goods, other than water, through Pipelines or other Conduit Services" enumerated in Section 65(105)(zzz) of the Finance Act, 1994. In addition, the impugned order confirms Service Tax demand of Rs. 24,527/ -, disallows Cenvat credit of Rs. 7,49,820/ - apart from confirming demand of consequent interest and penalties. Service Tax of Rs. 24,527/ - and remittance of disallowed Cenvat credit of Rs. 7,49,820/ - has already been made along with interest of Rs. 1,77,919/ -. The waiver of pre -deposit and stay is sought only in respect of the Service Tax demand of Rs. 54,45,99,527/ -. On the admitted factual scenario, the petitioner an instrumentality of the Union of India purchases gas from gas fields and sells the gas to its customers. An agreement dated 16 -4 -2008 between the appellant and M/s. Indo Gulf Fertilisers (A unit of Aditya Birla Nuvo Limited) is an illustrative agreement setting out the terms and conditions between the appellant and its customer in respect of sale and transportation of gas. Under the terms of this agreement "delivery point" is a point downstream of the seller's pipeline at the upstream weld of the connection to the buyer's plant at Jagdishpur. Clause 4.1 of the agreement in clause (a) specifies that the gas sold and transported to the buyer pursuant to the contract shall be at the delivery point at the buyers point facilities at Jagdishpur. Article 10 of the terms and condition of the agreement sets put particulars regarding pricing and billing. It is stipulated that the buyer shall reimburse the seller of any tax payable by the buyer to the State or local authority, on account of the sale and/or transfer of title of gas to the buyer at the delivery point. There are other conditions of the agreement between the parties as revealed by the illustrative agreement which prima facie establishes that the transfer of title in the gas piped from the appellant to its customer is at the delivery point at the customer's location. The appellant charges from its customer the price of the gas at which it was purchased from the gas fields and an agreed quantum towards transportation charges and a marketing margin. The invoices raised between the appellant and its customer is required to specify the price at which the appellant purchased the gas, the cost of transportation and the marketing margin, as per stipulations by the Ministry of Petroleum and Natural Gas in this behalf.
(2.)THE appellant was remitting Service Tax for having provided the taxable service under Section 65(105)(zzz) on the transportation cost charged by the appellant on its customers. Learned Counsel for the appellant states that since the transportation of gas is a service to itself no Service Tax is exigible on this activity. Nevertheless abiding by an advice given by the Commissioner of Service Tax on the appellant, Service Tax was remitted on the transportation charges received. The appellant was remitting Service Tax on the transportation charges, though not required by law to do so.
The impugned order confirms the liability on the premise that marketing margin is an amount received by the appellant from the buyer for providing "some service" to such buyer, falling within the purview of Section 65(105)(zzz). The adjudicating authority records inter alia that the appellant charges the marketing margin from its customer for providing transmission service, for transporting its own gas. There is an inbuilt fallacy, prima facie in this premise of the learned adjudicating authority.

(3.)SINCE the appellant is transporting its own gas and the sale of the gas to its customers occurs at the customer's inlet point in customer' premises, on principle and authority the activity of the appellant in transporting the gas is a service to self and therefore, falls outside the ambit of the taxable service. For the aforesaid reasons, we grant waiver of pre -deposit in full and stay all further proceedings for realisation of the adjudicated liability, pending the appeal. Stay application is accordingly disposed of.
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