TDS on gas transportation charges depends on whether transport is part of the sale contract or a separate third-party service.

Where the seller itself transports gas to the delivery point, the transportation component remains part of the sale contract and is not treated as a separate works or hiring arrangement for TDS purposes; accordingly, no deduction was required on such charges under the provisions discussed. The Tribunal relied on its own earlier view and CBDT Circular No. 9 of 2012, which states that separate billing of transportation charges does not alter the contract's character. Payments for transporting gas purchased from other sellers were treated differently and required factual verification under the appropriate TDS provision. The rectification-based issue for the later year did not survive independently because of the earlier adjudication.

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Issues: Whether the transmission charges paid to GAIL for gas transported by GAIL from its own supply attracted deduction of tax at source under section 194C or section 194I of the Income-tax Act, 1961, and whether the related demand and rectification proceedings could be sustained in the light of the earlier tribunal order and the CBDT circular.

Analysis: The Tribunal followed its earlier decision in the assessee's own case and the Gujarat High Court's view that where the seller itself transports gas to the point of delivery, the transportation component remains part of the contract for sale and not a works contract. It also relied on the CBDT Circular No. 9 of 2012 clarifying that the mode of billing, whether transportation charges are embedded in the price or shown separately, does not change the nature of such a contract. At the same time, the Tribunal noted that transportation charges paid to a third-party transporter for gas purchased from other sellers stand on a different footing and would be governed by the appropriate TDS provisions. On the facts, the matter required factual verification for the portion relating to gas purchased from other agencies, while the rectification-based appeal for the later year did not survive independently in view of the earlier adjudication.

Conclusion: TDS was not exigible on transportation charges relating to gas supplied and transported by GAIL itself, but the issue concerning payments linked to gas purchased from other sellers required factual re-examination. The Revenue's appeals for the earlier years were disposed of for statistical purposes, and the appeal for the later year was dismissed.

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