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Hindustan Petroleum Corporation Ltd. Versus Commissioner of Central Excise, Delhi-III

2015 (9) TMI 422 - DELHI HIGH COURT

Waiver of pre-deposit - tribunal did not follow the order of similar bench to grant full waiver - HPCL was providing Business Auxiliary Services ('BAS') to IGL with regard to the sale of CNG through the retail outlet of HPCL - CESTAT proceeded to analyse the individual clauses of the Agreement dated 31st October, 2007 between HPCL and IGL and came to prima facie, conclusion that "there is no sale of natural gas or CNG to the appellant and sale of CNG the retail customers is by the IGL itself wit .....

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v. CST, Mumbai required reconsideration, then the appropriate course for the Principal Bench, CESTAT to adopt would be to refer the matter to a larger Bench of the CESTAT. In any event, at the stage of considering an application for stay, the CESTAT, Principal Bench ought to have proceeded on the basis that in light of the final judgment in BPCL v. CST, Mumbai (2014 (7) TMI 159 - CESTAT MUMBAI) being favour of HPCL, it had a prima facie case.

CESTAT was not justified in declining to g .....

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15 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 ₹ 1,36,15,903/- apart from interest and penalties. 2. The basis of the demand of service tax on HP .....

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e 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 t .....

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e 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 tr .....

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t;prima facie, we are of the view that facts of the applicants case are similar to Bharat Petroleum Corp. Ltd" and ordered a complete waiver of pre-deposit. 5. In the impugned order, the CESTAT, Principal Bench at New Delhi (of the same Bench strength as the Coordinate Bench of the CESTAT in Mumbai which passed the judgment in BPCL v. CST, Mumbai (supra), did notice the said decision but observed that it did not "appear to have examined the terms of the agreement between the retail pet .....

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wn a ratio which operates as a precedent." 6. In the impugned order, the CESTAT then proceeded to analyse the individual clauses of the Agreement dated 31st October, 2007 between HPCL and IGL and came to prima facie, conclusion that "there is no sale of natural gas or CNG to the appellant and sale of CNG the retail customers is by the IGL itself without an intermediary transfer of property in CNG in favour of the applicant". The corresponding prima facie, conclusion, therefore, wa .....

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of 50% of the assessed liability along with proportionate interest would be justified. 7. At the hearing of the present appeal on 21st August, 2015, the Court recorded the submission of Mr Devnath, learned counsel for the Appellant, that he would on the next date produce a copy of the agreement entered into between HPCL and MGL, which was the subject matter of the final order in BPCL v. CST, Mumbai. He also undertook to inform the Court whether any appeal had been filed against the said order. 8 .....

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of the CESTAT while interpreting identical clauses of a similar agreement involving HPCL itself came to the conclusion that HPCL was not providing Business Auxiliary Services to MGL in carrying on the activity of providing CNG to consumers through its retail outlets, that final judgment itself constituted a prima facie case in favour of HPCL. If the Principal Bench of the CESTAT felt that the agreement between HPCL and IGL, identical to the agreement between HPCL and MGL, called for a different .....

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