Fixed facility charges' for transportation of gases not liable for Service Tax
In the case of M/s BOC India Ltd. vs. CCE & ST, Jamshedpur, (2018 TIOL 3891(CESTAT-Kolkata)), the assessee is a manufacturer of various gases including oxygen, nitrogen and argon. Further, they were supplying gases to its customers through pipelines, which are situated in adjacent premises. For this purpose, the assessee installed pipe line supply systems within the premises of its customers and was charging (a) variable charges depending on the quantum of gas supplied and (b) monthly charges in the form of 'fixed facility charges'. The appellant assessee was paying Central Excise Duty on the value of gas upto the point of removal i.e. in the present case is the boundary wall where a meter is fixed. The assessable value for payment of excise duty includes all the expenses including the portion of facility charges relating to gas upto the delivery point.
The department demanded service tax on the said 'fixed facility charges' by contending that, such charges are consideration for transportation of gas through pipelines and same shall fall under Section 65 (105)(zzz) of FA, 1994 i.e. 'transport of goods through pipe lines or other conduit'.
Thus, the Tribunal in the present case, observed the clarification issued by CBEC in the identical case of M/s Inox Air Products Ltd. Bombay. In such case also, the appellant was collecting the fixed facility charges apart from the sale consideration for supplying the gases inside the client's premises to store such gases for subsequent consumption. The CBEC clarification clarified that such fixed facility charges are to form part of the transaction value for the purposes of Central Excise duty. Therefore, the Tribunal by following the CBEC clarification held that there is no justification for demand of service tax.