2015 (5) TMI 665 - AT - Service Tax

Waiver of pre deposit - service to self - transport of goods, other than water, through Pipelines or other Conduit Services - 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 - Held that - 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 s 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. - Stay granted.

Summary

Issues involved:
1. Service tax demand on transport of goods through pipelines.
2. Disallowance of cenvat credit.
3. Waiver of pre-deposit and stay sought.

Analysis:

Issue 1: Service tax demand on transport of goods through pipelines
The appellant appealed against an adjudication order confirming a service tax demand of Rs. 54,45,99,527, penalty, and interest for providing transport services through pipelines. The agreement with a customer outlined the terms, including the delivery point downstream of the seller's pipeline. The agreement specified reimbursement of taxes by the buyer and pricing details. The appellant charged for gas, transportation, and marketing margin. The appellant remitted service tax on transportation charges, although not legally required. The impugned order considered marketing margin as payment for a service falling under Section 65(105)(zzz). However, since the appellant transported its own gas to the customer's premises, the activity was deemed a service to itself, exempt from taxable service.

Issue 2: Disallowance of cenvat credit
Additionally, the impugned order disallowed cenvat credit of Rs. 7,49,820, along with interest and penalties. The appellant had already paid the service tax and remitted the disallowed cenvat credit with interest. The waiver of pre-deposit and stay was requested only for the service tax demand of Rs. 54,45,99,527. The tribunal granted full waiver of pre-deposit and stayed further proceedings pending the appeal, considering the appellant's argument that transporting its own gas constituted a service to itself, falling outside taxable service.

Conclusion:
The tribunal ruled in favor of the appellant, granting waiver of pre-deposit and staying further proceedings due to the nature of the service provided by the appellant being considered a service to itself, thus not falling under the taxable service category. The judgment highlighted the specific details of the agreement and the transportation process to support the appellant's position, ultimately relieving them of the service tax demand.