Case Law Details
Petronet LNG Limited Vs Principal Commissioner of Service Tax (CESTAT Delhi)
The Appellant regasifies Liquefied Natural Gas owned by customers in terms of Agreements which also contain a clause relating to “allowed loss and consumption” under which a certain percentage of LNG made available to the Appellant by the customers is understood to be lost/consumed in performing the regasification The Appellant discharged service tax liability on the amount received for regasification services, but the Revenue proposed to levy service tax on the value of such pre-fixed quantum of LNG identified towards “allowed loss and consumption” on the ground that such “free of cost” supplies of LNG by the customers should have formed part of the “consideration” received by the Appellant and should be included in the taxable value for payment of service tax. This demand proposed in the show cause notice was confirmed by the Principal Commissioner. It is this issue that has come up for consideration in this Appeal.
Commissioner was not justified in confirming the demand of service tax on the value of pre-determined quantum of LNG identified by the parties towards “allowed loss and consumption” since such “free of cost” supplies of LNG by the customers cannot form part of the “consideration” received by the The value of such LNG cannot, therefore, be included in the taxable value for payment of service tax.
FULL TEXT OF THE CESTAT JUDGEMENT
Service Tax Appeal No. 52946 of 2016 has been filed by Petronet LNG Ltd1 to assail the order dated 26 July, 2016 passed by the Principal Commissioner of Service Tax Delhi-12 that confirms the demand of service tax of Rs. 12,68,50,874/- upon the Appellant and also orders for recovery of interest and payment of penalty.
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