Mere leasing of LPG storage space is not storage and warehousing service unless core storage operations are also undertaken.

Leasing LPG storage tanks and associated equipment on an exclusive licensed basis, with the provider undertaking only pumping from the ship into the tanks, did not amount to storage and warehousing service for service tax purposes. The determinative principle was that mere renting of storage space is insufficient unless the provider also assumes the core incidents of storage operations, such as security, stacking, loading or unloading within the storage area. As unloading at the jetty was treated as port service and the subsequent storage responsibilities remained with the recipient, the activity fell outside the taxable service. The demand, penalties and interest were therefore not sustainable.

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Issues: Whether leasing out LPG storage tanks with associated equipment, while undertaking only pumping from the ship to the tanks, amounts to taxable storage and warehousing service.

Analysis: The agreement showed that the tanks and associated equipment were given on an exclusive licensed basis for BPCL's use, while the appellant's responsibility was limited to pumping LPG from the ship into the tanks. The Court applied the settled distinction that mere renting of storage premises does not amount to storage and warehousing service unless the provider also undertakes core incidents of such service, such as security, stacking, loading or unloading within the storage area. The CBEC circular on the scope of storage and warehousing service was relied upon to hold that mere renting of space is not enough. Since unloading at the jetty was already treated as port service and the subsequent storage operations were BPCL's responsibility, the activity did not satisfy the legal requirements of storage and warehousing.

Conclusion: The activity was not taxable as storage and warehousing service and the demand, penalties and interest were not sustainable.

Ratio Decidendi: Mere letting out of storage space or equipment, without assuming responsibility for the storage operations and incidents of storage service, does not constitute storage and warehousing service for service tax purposes.

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