FINANCE ACT, 1994

Section 65(105)(zzzzj)

Supply of piped natural gas - Charges collected by the respondent for supply of pipes and measuring equipment to its customers - Validity -

Issue arose for consideration as to whether section 65(105)(zzzzj) is applicable in the present case, that was, whether the supply of pipes and measurement equipment (SKID equipment), charged under the head of 'gas connection charges' by assessee to its industrial, commercial, and domestic consumers, amounts to supply of tangible goods for their use. High Court, however, dismissed the appeal of revenue holding that supply of pipes and measurement equipment charged by assessee to its industrial, commercial, and domestic consumers could not be supply of tangible goods. Held: Section 65(105)(zzzze) seeks to tax services related to information technology and interprets the 'right to use' to include the 'right to reproduce, distribute, sell, etc'. This understanding of 'use' differs from the supply of tangible goods under section 65(105)(zzzzj) at hand, where effective control or possession is not ceded. Supply of the pipelines and the measurement equipment (SKID equipment) by assessee was of use to the customers and is taxable under section 65(105)(zzzzj). Adjudicating authority was correct in concluding that buyer of gas is as interested as the seller in ensuring and verifying the correct quantity of gas supplied through the instrumentality of the measurement equipment and pipelines. SKID equipment fulfils the description in section 65(105)(zzzzj) of a taxable service: service in relation to 'tangible goods' where the recipient of the service has use of the goods. High Court was in error in interfering with the findings and order of the adjudicating authority.

Followed:Great Eastern Shipping Co. Ltd. v. State of Karnataka & Ors. 2020 (3) SCC 354, UOI v. Indian National Shipowners Ass. & Ors. 2010 (14) SCC 438 : 2010 TaxPub(ST) 1017 (SC), Association of Leasing & Financial Service Companies v. UOI & Ors. (2011) 2 SCC 352 : 2010 TaxPub(ST) 948 (SC), Bharat Sanchar Nigam Ltd. (BSNL) v. UOI 2006 (3) SCC (1) : 2006 TaxPub(DT) 1454 (SC)<.i> and Indian National Shipowners' Association v. UOI (2009) 4 AIR Bom R 775 : 2009 TaxPub(ST) 326 (Bom).