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2017 (9) TMI 554

Valuation - includibility - marketing margin charged by the appellant for the services of transportation of gas through pipeline in terms of Section 65(105) (zzz) - Held that: - 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 - any services or activity prior to actual sale of gas has no two persons identifiable as service provider and service recipient. The activities and services by the appellants prior to actual sale, are for self - Service Tax liability on the marketing margin set aside - appeal allowed - decided in favor of appellant. - ST/60059/2013 - ST/A/55445/2017-CU[DB] - .....

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demand of ₹ 24,527/- on supervision charges. These demands on these two, are not contested in the present appeal. 3. The ld. Counsel appearing on behalf of the appellant submitted that the entire contract is for sale of natural gas and the transportation undertaken is towards fulfillment of the said sale transaction. He drew our attention to Article 4. 1(a) of the agreement dated 16.04.2008 between appellant and Indo-gulf Fertilizers. The transfer of title takes places only at the delivery point and all the risks rest with the appellant up to that point. The transportation activities undertaken by the appellant was only on account of the obligation in the sale contract. Such activity is in the nature of service to the self and not se .....

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no penalty also can be imposed. 6. The ld. AR supported the findings of the original authority. He submitted that the marketing margin is separately shown and cannot be considered as sale price of natural gas. The original authority examined the contracts and various other documents submitted by the appellants before arriving at his findings. It is submitted that the price of natural gas is regulated and the marketing margin is towards such charges for services rendered by the seller for marketing gases to the buyer. The marketing margin is over and above the gas price and accordingly cannot be considered as price of gas. 7. We have heard both the sides and perused the appeal records. The only point of dispute is the liability of the appel .....

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paid on transmission charges in respect of sold gases by itself cannot be the reason for holding the tax liability for marketing margin. The nature of such consideration has to be examined. Admittedly, marketing margin is an approved consideration on sale of gas, by the Ministry of Petroleum and Natural Gas. We note that Ministry of Petroleum and Natural Gas fixes the marketing margin that should be charged from the customers by the company marketing the gas. Such marketing margin money will arise only in respect of natural gas sold. As the same is at the delivery point of the customer and transportation of gas is at the risk of the appellant, we find that there is no service element attributable to the consideration received as marketing m .....

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al authority dropped the demand for Service Tax. In this connection, we refer to adjudication order dated 24.03.2011 of the Asstt. Commissioner, Agartala and order dated 24.02.2010 of JC, Shillong. We also note that Hon ble Gujarat High Court in Krishak Bharti Cooperative Limited (supra) dealing with income-tax case examining similar contract of the appellant, categorically held that the ownership of the gas passed on from Gail to the buyer only at the point of delivery and not before. 8. Considering the above discussion and analysis, we find the impugned order is not legally sustainable on this issue. Accordingly, the same is set-aside. The appeal is allowed with reference to Service Tax liability on the marketing margin, contested by the .....

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