2015 (9) TMI 1092 - AT - Service Tax

Waiver of pre deposit - Business Auxiliary Service - marketing or sale of goods belonging to IGL - Held that - Prima facie, in view of stipulation in clause 13.2.3, it appears that there is no sale of natural gas or CNG to the appellant and sale of CNG the retail customers is by IGL itself without an intermediary transfer of property in CNG in favour of the applicant. If that be prima facie the position emanating from the agreement, between the applicant and IGL, the activity of the appellant in marketing or sale of goods belonging to IGL, would fall within the ambit of Section 65 (105) (zzb) read with Section 65 (19) of the Finance Act, 1994. - in respect of identical transactions covered by a substantially similar agreements the Final Order in Bharat Petroleum Corporation Ltd. (2014 (7) TMI 159 - CESTAT MUMBAI) and the Interim Order in Indian Oil Corporation Ltd. (2015 (9) TMI 1098 - CESTAT NEW DELHI). - balancing interests of Revenue and of the applicant justify a pre-deposit of 50% of the assessed liability along with proportionate interest by the applicant - Partial stay granted.

Summary

Issues:
Stay Application seeking waiver of pre-deposit and stay of further proceedings regarding service tax liability on sale of Compressed Natural Gas (CNG) at retail outlets.

Analysis:
The impugned order confirmed service tax liability on the basis that the applicant provided Business Auxiliary Service (BAS) to a company on the sale of CNG at retail outlets. The dispute revolves around whether there was a transfer of property in natural gas or CNG from the company to the applicant before the sale to retail customers.

The Tribunal considered similar agreements in previous cases but found that those judgments did not analyze the transactional documents in sufficient detail to establish a precedent. The agreement between the applicant and the company specified obligations regarding the vending of CNG to retail customers but did not conclusively clarify if there was a sale of CNG from the company to the applicant.

Clause 8 of the agreement shed some light on the issue of property transfer, indicating that CNG might continue to be the property of the company. The Tribunal noted that if there was no transfer of property in CNG to the applicant, the activity of selling goods belonging to the company would fall within the ambit of relevant sections of the Finance Act, 1994.

Considering the interests of both the Revenue and the applicant, the Tribunal ordered a pre-deposit of 50% of the assessed liability along with interest to be made by the applicant within a specified timeframe. The Stay Application was disposed of accordingly, with compliance required by a set date.