2018 (3) TMI 630 - AT - Service Tax

Valuation - includibility - marketing margin charged by the assessee-Appellants - The original authority held that the marketing margin charged by the assessee-Appellants from their customers is a consideration for transportation of gas and is required to be included in the gross value of taxable service - Held that - an identical issue has come up before the Tribunal in the assessee-Appellants own case 2017 (9) TMI 554 - CESTAT NEW DELHI , where it was held that The activities and services by the appellants prior to actual sale, are for self and Service Tax liability on the marketing margin set aside - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Appeals against Service Tax demand on marketing margin charged by assessee-Appellants for transportation of gas; Inclusion of marketing margin in taxable value for transportation services; Dispute on Service Tax liability; Denial of Cenvat credit and demand on supervision charges.

Analysis:
The appeals were filed against the Order-in-Originals passed by the Commissioner of Central Excise & Service Tax, New Delhi. The dispute revolved around the inclusion of marketing margin in the taxable value for transportation services provided by the assessee-Appellants. The original authority held that the marketing margin charged should be included in the gross value of taxable service, leading to Service Tax demand and penalty under Section 78 of the Finance Act, 1994. Additionally, Cenvat credit was denied, and demand on supervision charges was confirmed, which were not contested in the appeals.

During the hearing, it was noted that a similar issue had been addressed by the Tribunal in the assessee-Appellants' own case previously. The Tribunal's earlier order emphasized that the marketing margin charged by the appellants was not attributable to the transportation of gas. The Tribunal observed that the marketing margin was an approved consideration for the sale of gas, set by the Ministry of Petroleum and Natural Gas. It was clarified that the marketing margin arose only in respect of the natural gas sold and was not linked to any service element. The Tribunal highlighted that the nature of the marketing margin had to be examined separately from the transportation charges subject to Service Tax.

Based on the analysis of the previous order and the facts of the present case, the Tribunal found no merit in the impugned orders. Consequently, the Tribunal set aside the orders and allowed the appeals filed by the assessee-Appellants. The judgment emphasized that the marketing margin was considered part of the sales transaction value subject to VAT, and there was no identifiable service element separate from the sale transaction. The decision provided clarity on the Service Tax liability concerning the marketing margin charged by the assessee-Appellants, ultimately ruling in favor of the appellants and overturning the Service Tax demand related to the marketing margin.