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TMI Blog2022 (5) TMI 960X X X X Extracts X X X X X X X X Extracts X X X X ..... CGST Act, its customers have not paid the value portion of SUG invoices. This system use gas is- (a) used by M/s Shell as fuel for re-gasification plant (b) retained as its gain (c) used for flaring which is an incidental expensing for the re-gasification procedure and falls within the scope of costs incurred for regasification service. For this, we hold that amount of SUG value charged on its customers vide GST invoices does fall under the cost of provision of service of Re-gasification and thereby an indispensable component of taxable value of re-gasification service supply by M/s Shell - this gas charge which is used by M/s Shell is cost on re-gasification services, to be precise it is an expenses incurred by M/s Shell for the Re-gasification scope of service to be supplied to its customers and as M/s Shell is not purchasing gas from market but made an agreement with customer for a SUG quantity to be provided to customers for the subject service supply, it is found that this SUG quantity to be provided by its customers is now translated into SUG value by M/s Shell invoices raised on its customers. The literal meaning of the phrase System Use Gas has been justified as the gas has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nature and makes it violently reactive and explosive if it comes in contact with air (oxygen). Accordingly, for long distance transportation of natural gas through sea route, the gas is condensed into a liquid state at close to atmospheric pressure by cooling down the gas to very low temperatures (approx. minus 160 degrees celsius). Condensation of natural gas from gaseous to liquid state reduces the volume of gas by 600 times and thus, helps transport huge volume of natural gas by conversion of the same in liquid form. Upon receipt of LNG at the destination port, natural gas in liquid state is again converted into gaseous state. 4. The LNG re-gasification services provided by M/s Shell involves four major processes consisting of LNG unloading, LNG storage in cryogenic tanks, vaporizing of LNG into RLNG and RLNG send out for delivery to the Customer. In order to understand the technical aspects involved in the issue at hand, it is necessary to explain the re-gasification process undertaken at the Terminal. Therefore, role of each of the equipment significant for performance of said processes are explained below in brief: i. LNG unloading arm: The onshore jetty (an extended pier ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s through vertical panels of the tubes and is vaporized by thermal exchange with a falling film of sea water. viii. SCV: The SCV is composed of a warm water tank where a stainless steel tube bundle is submerged. The water of the tank is directly heated from a submerged combustion burner which uses natural gas for its operation. The LNG is vaporized by passing through the tubes bundle where heated water acts as the heat exchanger. SCV is only a standby mechanism for re-gasification of natural gas at the Terminal and for this reason only one SCV has been installed at the Terminal. At all times, ORV continues to be the primary and preferred mechanism for re-gasification of natural gas. ix. Send out unit: The RLNG is transported through a 14-km long pipeline from the Terminal to village Mora (near Hazira). At the delivery point, Applicant's delivery pipeline is connected with the Customer pipeline. For effective delivery, the gas pressure of Applicant's pipeline has to be higher than the pressure of the transporter's pipeline. Such pressure is achieved through HP pumps installed at the Terminal. The pipeline is protected against overpressure from the Terminal by a high integrity pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . b) The LTCORA Charges calculation in respect of a Billing Period shall be equal to the aggregate of the LTCORA Charges for each Day during a Billing Period… …." 6. M/s Shell as consideration collects re-gasification charges from its Customers as per the terms mutually agreed between the parties to the agreement. The said re-gasification charges are computed by multiplying the actual quantity of RLNG delivered at the relevant delivery point(s) with the re-gasification tariff in respect of such day according to the Agreement. System Use Gas 7. M/s Shell has submitted that the process of re-gasification also involves certain process losses. The said possible/potential losses during the process of re-gasification are understood by the parties as System Use Gas (SUG). The inherent loss of gas during the re-gasification process is also an internationally recognized concept. Thus, to mitigate the extent of loss, the parties agree upon a percentage towards estimated losses during the process of re-gasification and the said understanding is duly captured in the Agreement executed for the provision of regasification services. That SUG is nothing but the loss of gas dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have any impact on the re-gasification tariff charged from the Customers. 11. M/s Shell further submits that it is relevant to note that any efficiency or inefficiency (on account of uncertain events such as unplanned maintenance) leading to higher losses as compared to the stipulated percentage of SUG, would be borne solely by M/s Shell at its own cost. 12. The invoice for the re-gasification charges is issued to the Customer at the time of delivery of RLNG at respective delivery points. The re-gasification charges are computed by multiplying the agreed re-gasification tariff and the quantity of RLNG delivered to the Customer. Current Model 13. M/s Shell submits that presently they are charging GST on the SUG by raising a separate invoice on the Customer. It is relevant to note that a separate invoice is issued and GST is being paid by M/s Shell only as an abundant caution under GST and the parties to the agreement agree that SUG is not a consideration for re-gasification service. That no amount whatsoever is being paid or collected towards the SUG in the present transaction. The relevant clause of the agreement with the Customer is as follows: "6.6 System Use Gas User sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of CGST Act are referred herein for ease of reference and the same may be read along for the purposes of GGST Act wherever applicable), for re-gasification services provided by M/s Shell to the Customers. Consequently, no GST is payable on the SUG stipulated under the Agreement with the Customers. In this regard, M/s Shell makes the following submissions. Valuation provisions under GST 18. M/s Shell has submitted that under the CGST Act, the levy of tax is on the event of supply, which is defined in Sec 7 of the Act. That the value of such supply is to be determined as per. Sec 15 of the CGST Act which provides that value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. The provision further deals with inclusions and exclusions from the value of supply. Section 15 of the CGST Act is read as under: "15. Value of taxable supply. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Rules 27-35) of the Central Good and Service Tax Rules, 2017 ("CGST Rules"). 18.2 As per Rule 27 of the CGST Rules, where the consideration is not wholly in money, the value of the supply shall be the open market value of such supply, However, if the open market value is not available, the value shall be the sum total of monetary and value of non-monetary consideration, if such amount is known at the time of supply. 18.3 That further, if the value of supply is not determinable as per the open market value method or the sum total of consideration, the value of supply shall be the value of like supply. If the said method is also not applicable, the value shall be the sum total of consideration in money and such further amount in money that is equivalent to consideration not in money as determined by the application of Rule 30 or Rule 31 (as discussed below), in that order. A summary of the valuation methods prescribed in Rule 27 of the CGST Rules is as follows: SN Rule Method Prescribed 1. 27(a) Open market value of supply 2. 27(b) Sum total of consideration in money and any such further amount in money as is equivalent to the consideration not in money, if such amount is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lume of send out LNG and its calorific value measurements [Point 7.2 on page 9 of the report] iii. There is variation in the SUG expressed as a percentage of dispatched gas which is largely on account of factors such as load variation, capacity use, management of high load out, malfunctions and other operations [Point 9 on page 13 of the report] iv. For M/s Shell's Terminal, the report determines a conservative statistical estimate of SUG losses to be 1.22 percent which is the sum of average of other losses of 0.19 percent and measurement uncertainties of 1.03 percent [Point 6.6 on page 2 of the report] v. Industry practice is to have contracts based on a pre-agreed re-gasification loss percentage including measurement inaccuracies and uncertainties for arriving at the net deliverable quantity [Point 4 on page 7 of the report] vi. It is observed that the contracted percentage of losses typically varies in the order of 0.66 percent to more than 1 percent within the Indian LNG industry and 0.3 percent to 2 percent as per international practice [Point 6.5 on page 2 of the report] A copy of the report is enclosed herewith as Exhibit-C. 21. M/s Shell cited a report on "Internat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... een excluded from the value of supply by the Courts in the erstwhile regime 24. M/s Shell submits that the issue stands settled in favour of M/s Shell under the erstwhile regime, the Courts have affirmed the view that process loss pre-agreed by the parties does not form a part of the consideration/ the value of supply. 25. In this regard, M/s Shell has placed reliance on the decision of the Tribunal in the case of Petronet LNG Ltd. v. Pr. Commr. of ST, Delhi-I, 2019-VIL-659-CESTAT-DEL-ST, wherein the Tribunal, on similar facts, had held that SUG agreed between the parties does not constitute consideration for re-gasification services provided by the Appellant to its Customers. In this case, the Appellant was engaged in re-gasification of LNG owned by Customers. As per the agreements with the Customers, a certain percentage of LNG was made available to the Appellant by the Customers as allowed loss and consumption, which was understood to be gas lost/consumed in performing the re-gasification services. The Appellant discharged service tax on the amount received for re-gasification services. However, the Revenue sought to levy service tax on the value of such pre-fixed quantum of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion while pronouncing the ruling in the instant case 29. M/s Shell cited case of M/s Hipolin Ltd. v. CCE Ahmedabad 2012 (26) S.T.R. 191 (Tri. - Ahmd.), the Tribunal held that keeping in view the process of manufacture, some process loss is inevitable and in the absence of any evidence to the contrary, the contention that the said shortage/damages relates to the process loss has to be accepted and accordingly, duty demanded on the process loss is unsustainable. 30. In Kirloskar Oil Engines Ltd. vs. Commissioner of Central Excise, Nashik 2017 (349) ELT 299 (Tri.-Bom), the appellant sent raw materials i.e. valve steel & steel round bars to M/s Advance Mechanical Works, Rajkot for job work. After processing, the appellant received material short to the tune of 16% due processing loss. A show cause notice was issued contending that the 16% loss is abnormal and thus the Department proposed to ley excise duty on such loss. The Tribunal inter alia held that 16% process loss is on the basis of assumption and presumption and without any evidence of diversion of input, cannot be subjected to tax. 31. In Commissioner of Central Excise, Belapur vs. Hydrogas PLG (I) Pvt. Ltd. 2006 (196) ELT 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under GST are similar in erstwhile laws. 37. M/s Shell submits that SUG cannot be considered as consideration for the re-gasification service provided by M/s Shell to its Customers. 38. M/s Shell submits that the SUG agreed between them and the Customers does not qualify as consideration for the re-gasification services provided by them and thus, the same does not form a part of the value of taxable supply in the present case. 39. M/s Shell further submits that before elaborating on the aspect of how SUG does not qualify as consideration, it analyses the provisions which govern the determination of consideration for the purposes of the CGST Act. Consideration under the GST Laws The term consideration is defined in S. 2(31) of the CGST Act as follows: "(31). "consideration" in relation to the supply of goods or services or both includes,- (a) any payment made or to be made, whether in money or otherwise, in respect of, in response to, or for the inducement of, the supply of goods or services or both, whether by the recipient or by any other person but shall not include any subsidy given by the Central Government or a State Government; (b) the monetary value of any act or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to GST." 42.2 Further it is submitted by M/s Shell that, it has been consistently held by the Courts that only the amount that has nexus with the activity can be taxed under the taxation laws. In the case of Baroda Electric Meters Limited vs Collector of Central Excise [1997 (94) ELT 13 (SC)], the Apex Court has held for the levy of tax, assessable value has to be linked to the taxable activity. As per the Court, any and every amount earned by the assessee would not be exigible to tax, but such amount has to be received in relation to the taxable activity performed. 42.3 Further it is submitted that considering that the European Union VAT Laws as similar to the GST Laws in India, M/s Shell relies upon the decisions rendered by the European Court of Justice to understand the meaning and scope of the term consideration. 42.4 In the decision of ECJ in Case No. 102/86 Apple and Pear Development Council, the Court determined that there must be a direct link between the supply made and the consideration received if there is to be consideration in the VAT sense. In this case, Apple and Pear Development Council was set up by the UK Government in 1966 to promote the apple and pear growin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the product dealt with in the present case: i. Natural gas is a naturally occurring hydrocarbon gas mixture consisting primarily of methane. Methane being highly flammable, makes the gas reactive if exposed with air (oxygen). ii. For transportation of natural gas over long distances, natural gas is condensed into a liquid state at close to atmospheric pressure by cooling down the gas to very low temperatures (minus 160 degrees). iii. Condensation of natural gas from gaseous to liquid state reduces the volume of gas by 600 times. iv. Upon receipt of LNG at the destination port, natural gas in liquid state is again converted into gaseous state using vaporizers. v. Typically, natural gas is measured by volume and is stated in cubic meter/ feet. However, due to varying composition (quality) it is a standard practice to measure it in terms of energy. vi. The energy contents of the gas are measured in terms of British Thermal Units (BTU). The energy content (high or low heating value) of volume of natural gas varies with the composition of the natural gas (percentage composition of methane and other gases) and thus, is dependent on the quality of gas when burned vii. Meas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quid temperature or tank pressure, Terminal tank pressure rises sharply and the gas is vented out automatically to control tank pressure. Such gas flared in the atmosphere is gas lost. iii. For the unloading of LNG from the LNG carriers to the storage tanks at the Terminal, unloading arms are connected to the discharge point on the vessel. It may be noted that the connectors at discharge point on the vessel as well as the unloading arms are made of specialized metal. At the time of disconnecting the unloading arm from the vessel, due to the friction between the metal surfaces, there is high risk of ignition. Considering the flammability of natural gas present in the unloading arms at that moment or any leakages that may happen during unloading, any such ignitors could lead to a fire hazard. In order to purge the flammability of natural gas, nitrogen gas is used in the unloading arms and reduce the chances of fire hazards. Such quantity of natural gas mixed with nitrogen is subsequently disbursed in the atmosphere and thus, such quantity of natural gas is lost. iv. The process of re-gasification of LNG at the Terminal is a continuous process and thus, natural gas (in liquid and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also recognized by the OISD (Oil Industry Safety Directorate) Standard 194, Edition 2016, issued by the Government of India, Ministry of Petroleum and Natural Gas, on the safety and design aspects of all the major components of an LNG receiving terminal facility including unloading, storage and re-gasification of LNG. Some aspects emerging from this report are: Calorific/ energy values of LNG are provided in a range due to uncertainty of LNG measurement Leaks and spills of LNG are inherent in the product and its handling Relief mechanisms in the form of flare/ release of gas to atmosphere are necessary 48. Thus, during the entire process of re-gasification, M/s Shell submits that gas is lost at various stages, as elucidated above. That in order to limit the risk of gas lost during the process of re-gasification, M/s Shell and its Customers have mutually contracted for a specified percentage of gas towards potential losses in the process of re-gasification i.e. SUG. 49. M/s Shell has submitted that SUG in the present case is nothing but an estimate of gas lost during the process and is not in the nature of consideration in relation to the re-gasification service provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion services. That SUG does not form a part of the consideration since regardless of the SUG, the regasification tariff remains the same, which is motive for M/s Shell. That the change in percentage of SUG does not influence the consideration agreed for the provision of regasification services. 55. M/s Shell submitted that the contracting parties have mutually consented only on the regasification charges as the consideration under the Service Agreement and accordingly, SUG is not in the nature of consideration decided between the parties for inducement of the supply of services. 56. M/s Shell submits that in terms of the settled jurisprudence under the tax laws of India, tax can be levied only on the consideration agreed between the parties under a commercial contract. In the present transaction, from the terms of the Agreement between M/s Shell and the Customers, it can be seen that the parties have agreed to treat only the re-gasification charges related to the RLNG delivered as consideration for the re-gasification service. In other words, the SUG stipulated in the agreement is not regarded as a part of the consideration for the service provided by M/s Shell. The relevant clau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for re-gasification services has been identified in the agreement as re-gasification tariff, the quantum of which has been mutually agreed between the contracting parties. Further, both the parties, i.e. M/s Shell and the Customers have accepted the possibility of losses during the process of re-gasification of LNG to RLNG and the challenges faced in the measurement of the product i.e. natural gas. With this understanding, both the parties have mutually set aside a pre-defined portion of the gas to account for such losses incurred during the re-gasification process and term the same as SUG. The percentage of SUG mentioned in the agreement is negotiated with the intention to assign the risk associated with the losses in the process of re-gasification. Thus, there is a consensus i.e. meeting of minds amongst the parties to the agreement to treat the SUG as merely allocation of allowed loss and to treat only the re-gasification tariff as consideration for the service. 60. That in the instant case, the intention of the parties while deciding the quantum of SUG is not to consider the same as an economic benefit arising to M/s Shell but to account for the losses incurred in the proces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charges are influenced by the possible emergence of iron ore fines and its additional value to the appellant." 63.1 The aforesaid decision has also been affirmed by the Apex Court and reported at Commissioner v. Godawari Power & Ispat Ltd. - 2018 (10) G.S.T.L. J168 (S.C.). 64. M/s Shell submits that in the instant case, the SUG is agreed only as an estimation of loss of gas in the process of re-gasification. Actual losses may be higher or lower than the estimate of process loss i.e. SUG. 65. M/s Shell submits that the re-gasification tariffs which is the sole consideration agreed with the Customer under the Service Agreement are completely unaffected from the SUG component. In this context, M/s Shell would like to place reliance on the decision of the Apex Court in the case of Commissioner of Central Excise, Mumbai-III vs. I.S.P.L. Industries Ltd. 2003 (154) ELT 3 (S.C.) wherein the Court held that when price is not influenced by the fact of interest free advance made by the buyer to the manufacturer, notional interest not includible to the assessable value of the goods. 66. That in the case of Murli Realtors Pvt. Ltd. vs. Commissioner of Central Excise, Pune-III 2015 (37) STR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration should be for the inducement of supply and there should be consensus ad idem to treat it as consideration by the parties to the contract. 72. M/s Shell submits that in the instant case, SUG is stipulated in the Agreement towards process loss and not as a consideration for the supply of re-gasification service. The provision of gas as SUG towards possible losses in the re-gasification process is a practice followed by the entire re-gasification industry both internationally as well as domestically. Further, in the terms of the Agreement also sufficiently clarify that SUG is allocated only towards process loss and not as a consideration for any service. 73. M/s Shell submits that since the requirements of consideration are not fulfilled in the present case, SUG cannot be treated as non-monetary consideration and therefore, the valuation rules contained in the CGST Rules have no applicability in determining the value of regasification service the present case. B. Value of SUG is not includible as per S. 15(2) of the CGST Act 74. M/s Shell submitted that Section 15(2) of the CGST Act deals with the inclusions in the value of supply under the GST Laws. That as per Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Customers is subject to the levy of GST and therefore, liable to be included in the consideration for re-gasification services determined as per Section15 of the CGST Act? Personal Hearing 79. Personal hearing granted on 18-2-22 was attended by Ms. Priyanka Rathi, Advocate and Shri Abhishek Nolkha and they reiterated the submissions. On enquiry regarding the levy of Service Tax on said SUG during pre- GST era, Ms. Rathi informed that a Show Cause Notice was issued on the identical issue in Service Tax proposing to demand Service Tax on SUG gas and that M/s Shell availed SVLDRS by paying the service tax computed amount as per the scheme in respect of the said Show Cause Notice. Further, as required by us, vide email dated 19-2-2022, submitted the copy of SCN dated 29-9-15 vide F.No. DGCEI/AZU/36-26/2015-16 issued by the Additional Director General, DGCEI proposing to demand service tax of Rs. 46,45,29,236/- for the period July-2010 to Sept-2014 along with applicable interest and penalties. Revenue's submission: 80. Revenue has neither submitted its comments on the Advance Ruling Application nor appeared for hearing. Discussion & Findings: 81. We have carefully considered a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the SUG invoices, but paying only the tax amounts, the customers cannot avail ITC on the tax portion reflected in the Shell's SUG invoices as per 2nd Provisio to Section 16(2) CGST Act, its customers have not paid the value portion of SUG invoices. 86. We have read the contract entered by M/s Shell with M/s GAIL (India) Pvt. Ltd. for regasification of its customers LNG. When inquired for the practise of M/s Shell in pre- GST era and whether service tax was paid on the value received for System use gas, M/s Shell submitted that in this regard in service tax era, a Show cause Notice was issued by the Department on M/s Shell (formerly known as LNG Hazira LNG Pvt. Ltd.) for service tax liability on 'SUG value' and later submitted a copy of the show cause notice. We have read the said Show cause notice dated 29-9-15 vide FNo DGCEI/AZU/36-26/2015-16 issued by Additional Director General, DGCEI (Directorate General of Central Excise Intelligence) for service tax leviabilty on SUG value proposing demand of Rs. 46,45,29,236/- for the period July-10 to Sept-2014, along with interest and invoking certain penalty provisions. When inquired from Central Revenue regarding the status of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n at paragraph 28 to the extent that the concept of SUG is same under both the tax regimes of Service Tax and GST. 91. On careful study of M/s Shell's submissions, We find that M/s Shell has submitted that the subject Gas (termed by M/s Shell as SUG) is consumed/ used by it for the following purposes,: i. Gas is used for controlling the Terminal Tank pressure, by way of gas being vented out automatically by flaring in the atmosphere. During unloading of the LNG from LNG carrier, Terminal tank pressure increases due to vaporization of unloaded LNG. Pressure in the tanks is managed through Boil off Gas compressors and supply of Boil off Gas to LNG carrier tanks. In case of receipt of LNG from a carrier with higher liquid temperature or tank pressure, Terminal tank pressure rises sharply and the gas is vented out automatically to control tank pressure. The first overpressure protection to the LNG storage tanks is given through flaring. ii. Gas is used by M/s Shell in operation of submerged combustion vaporizer (SCV) wherein water of the tank is directly heated from a submerged combustion burner which uses natural gas for its operation. iii. Gas is used in the planned maintenanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pvt. Ltd.) personnel namely Shri Sanjay Kshatriya, Terminal Manager And Shri Nitin Shukla, Managing Director are relevant to this subject matter, as the issue pertains to 'concept of SUG'; We place on record of this Ruling the following facts: i. M/s Shell re-gasifies its own LNG ii. Also, M/s Shell also re-gasifies LNG belonging to its customers. The re-gasification services covers the services related to re-gasification of LNG into RLNG on behalf of M/s Shells customers including allied, incidental and ancillary services such as receipt of LNG Carriers at the Port, unloading of LNG from LNG carriers and receipt by Shell of such LNG at the receipt point, temporary storage of LNG in storage tanks and delivery of RLNG. iii. For re-gasification, besides the LNG required as input, certain portion of LNG is prerequisite and consumed/utilised by M/s Shell for the following activities: A. A portion of Gas is used during the regasification process, as follows: I. Gas is used to run the Gas Turbine Generator(s) (GTGs) which operates as contingency along with power grid. The power/ electricity generated from GTG is used to run re-gasification plant, utility and other facilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l excise Act, stated ( as reflected in page 11 of cited SCN dated 29-9-15 this Relied upon document is available with M/s Shell) that gas lost/ gained, in measurements, cannot be determined in isolation and no separate records for individual losses are maintained. Further, that use of gas depends on contingencies and cannot be ascertained and fixed at various stages; and that Shell maintains records of LNG/ RLNG used to run GTG and SCV but no separate records for individual losses are maintained. Further, no separate records of Total gas used as fuel by Shell's LNG re-gasified and Shells customers LNG re-gasified is maintained. Further, the uncertainty in gas measurement loss can be both negative as well as positive. What is inferred for Negative losses is that there is gain in the stock of Gas or that M/s Shell retained this quantity of gas itself. Further, as per the Monthly energy Reports, the unaccounted consumption of gas, which falls under the category of SUG, by Shell from July 2010- 2014, 45 months out of 48, the uncertainty was negative meaning there was gain in stock in 45 months out of 48. D. The Monthly Energy Reports maintained at the terminal is the total energy s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby M/s Shells invoice reflecting the SUG value is a part and parcel of the Re-gasification service supply charges. It is on record that SUG has nexus with this re-gasification service supply and is a cost, both direct and also incidental & ancillary to the scope of re-gasification services. 96.1 The taxable supply value, as per Section 15 of CGST Act, 2017 reads as follows: 15. Value of Taxable Supply. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2) The value of supply shall include--- (a) any taxes, duties, cesses, fees and charges levied under any law for the time being in force other than this Act, the State Goods and Services Tax Act, the Union Territory Goods and Services Tax Act and the Goods and Services Tax (Compensation to States) Act, if charged separately by the supplier; (b) any amount that the supplier is liable to pay in relation to such supply but which has been incurred by the recipient of the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are different in its facts. When we read the agreement of Shell with its customers, the way the agreement was drafted gives an impression that its process loss and thereby We hold that facts of consumption/ utlisation of Gas in subject supply has been covered up; however with facts We brought on record vide our discussion, the true picture of gas being used has been brought to light regarding the nature of system use gas and its nexus with supply of regasification service( which has a wide scope and not limited to just re-gasification of LNG into RLNG as detailed at paragraph 2). Thus it is on record that the SUG value has direct nexus with the scope of re-gasification service supply by M/s Shell and falls within the definition of consideration for the said supply. Further, in the present case, there is a GST invoice raised by M/s Shell on its customers for SUG value and payment of GST has been made by its customers. 99. We note that the literal meaning of the phrase ' System Use Gas' has been justified as the gas has been used by system. Now the scope of re-gasification services covers not just regasification but an entire gamut of activities from unloading LNG from the Ships, it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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