TaxTMI 
TaxTMI 
TaxTMI 
2019 (9) TMI 530
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....aged in the manufacture of Compressed Natural Gas and is also engaged in providing the taxable service- "Transport of Gas through Pipelines", under Section 65 (105) (zzz) of the Finance Act, 1994 (hereinafter referred to as the Act). 3. During the course of audit conducted during January, 2009 it was noticed that the appellant had received income under the head "Gas Connection Charges" from Industrial, Commercial and Domestic customers and perusal of the sale agreements and invoices, revealed that such charges were collected for supply of pipes and measuring equipments at the time of providing new gas connections to the customers. These pipelines were laid and the equipment was installed by the appellant at the cost of the customer for gas flow and gas measurement. The ownership of the equipment was with the assessee. It, therefore, appeared to the Department that the transactions were covered under the category of "Supply of Tangible Goods service". 4. Accordingly, a show cause notice dated 13 October, 2009 was issued to the appellant mentioning therein that transactions undertaken by the appellant were covered under the category "Supply of Tangible Goods Service" and the appe....
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.... below:- "The demand in the present show cause notice has not been made under the category of "Transport of Goods by Pipeline or Other Conduit Services" on the charges recovered for supply of gas but on the "Gas Connection charges" recovered by the said noticee for providing the "Measurement Equipment" at the time of providing new gas connection to the customers, under the category of "Supply of Tangible Goods Services". Therefore, I find that there is a definite element of service involved in this transaction as the said noticee when supplies, installs and maintains the "Measurement Equipment" becomes a service provider to each respective customer to whom the "Measurement Equipment" is supplied, thus making each customer a service recipient. Thus, the contention of the said notice that the activity is not service at all gets negated. I find that there is no dispute to the fact that the ownership of the "Measurement Equipment" lies with the said noticee. The noticee has not disputed the issue of ownership. Thus there is no transfer of right of possession which satisfies the essential ingredient of the "taxable service" of "Supply of Tangible Goods" defined under Sec5tion 65 (....
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....terminated for the reason that in most of the cases the amount is not completely refunded. The Adjudicating Authority, however, accepted the plea of the appellant that in case service tax was to be levied, it should be levied on cum-tax value of the service and not on the entire value of gas connection charges. Accordingly, the Adjudicating Authority confirmed the demand of Service Tax and ordered for recovery of interest and imposition of penalty. 9. Similar orders were passed by the Adjudicating Authority on the three other show cause notices issued to the appellant for subsequent periods. 10. All these four orders passed by the Adjudicating Authority have been assailed by M/s Adani Gas Limited in the four Appeals referred to above. Two Appeals have been filed by the Commissioner of Service Tax to assail that part of the order of the Adjudicating Authority by which the benefit of cum tax value has been granted to the appellant. 11. Shri J.C. Patel, learned counsel appearing for the appellant has placed the definition of "supply of tangible goods service" and has submitted that the equipments were not supplied for the 'use' of the customers and, therefore, the mandatory requ....
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....is, therefore, clear that the service should be provided by any person to any other person for use of that person. In the present case, the appellant is distributing gas to its customers through pipes and for this purpose, it has installed an equipment called SKID at the customers' site. It is true that the equipment is installed at the site of customer and at the cost the customer without transferring the ownership or possession and that the appellant retains the right to use the equipments, but the issue that arises for consideration is whether the supply of tangible goods, namely the equipment is for the use of the customer. 16. To examine this issue, it would be appropriate to refer to the agreement entered into between the appellant and its customers. As noted above, the appellant supplies natural gas through pipes to the Industrial, Commercial or Domestic customers and for this purpose installs an equipment called 'SKID' at the customer's site to regulate the supply of natural gas supplied through pipes and to record the quantity consumed by the customers for the purpose of billing. The gas pipeline from the nearest distribution point is laid and maintained by appellant at ....