TMI Blog2024 (3) TMI 496X X X X Extracts X X X X X X X X Extracts X X X X ..... as the customer has failed to derive more than 90% through Pipeline, in that circumstances, the customer has to pay the penalty to the appellant. The amount received by the appellant by way of penalty, cannot be termed as the appellant has provided any service - the MDC received by the appellant, the appellant is not liable to pay service. Therefore, the demand confirmed in the impugned order quo minimum demand charges are set aside. Demand on realization of the sale value of gas on behalf of M/s Oil India Limited, Duliajan from the purchasers and from the consumers of gas along with royalty and marketing margin - HELD THAT:- It is reported that the marketing margins were collected from the customers for supply of gas on behalf of M/s Oil I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der. 2. The facts of the case are that the appellant is engaged in the activity of transportation of goods through pipelines or conduit and they pay the service tax on the said activity by filing ST-3 Returns in time. 2.1 During the course of Audit, it is evident that the appellant is receiving consideration in the form of Minimum Demand Charges (MDC) for gas transportation from their customers during the period when the total consumption of gas irrespective of the Caloric Value of gas by the customers falls below 90% of the yearly booked quantity of gas and such collection of MDC from their customers are nothing but collection against transport/transmission of gases to the customers and reported that the amount received/collecteld in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection of MDC from their customers, which is a form of quantity and not utilized the gas, therefore, the same cannot be termed as the provision of service and the said charges are also conditional after 90% of the quantity of gas. Therefore, the same cannot be terms as service provided by the appellant. Further, with regard to realization of the sale value of gas on behalf of M/s Oil India Limited from the purchasers/consumers of gas along with Royalty an Marketing Margin, they are not liable to pay service tax as held by this Tribunal in the case of GAIL India Limited Vs. Commissioner of Central Excise, Delhi reported in 2018 (8) GSTL 64 (Tri.-Del.). 4. On the other hand, the ld.A.R. for the Revenue supported the impugned order. 5. Heard b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the liability of the appellant to pay Service Tax of marketing margin indicated in their sale invoices of natural gas. The Revenue contended that marketing margin is relatable to the activity of transportation of gas. We are not in agreement with such proposition. The admitted facts are that appellants are engaged in marketing natural gas. They have pipelines for transmission of the natural gas to various destinations. They have entered into gas sales contract with their clients. A perusal of sample sales contract will indicate that the sale of such gas gets effected at the delivery point to the client. Article 4 of agreement dated 16-4-2008 clearly indicates that the gas sold and transported to the buyer pursuant to the contracts shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received as marketing margin. As already noted that the original authority apparently gave finding on the tax liability because the transportation charges are suffering Service Tax in respect of sale transaction. This by itself will not justify the Service Tax liability on marketing margin. There is no service by the appellant to the buyer of gas, independent to the sale transaction, as the sale transaction and the delivery point has been clearly defined in terms of the contract. The value liable to VAT is also clearly identified. The marketing margin is considered as part of sales transaction value and subject to VAT. After the change of ownership of gas, there is no consideration attributable to any service from the seller to the buyer. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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