Appellate tribunal rejects Revenue's appeal on service tax for vehicle parking, upholds open space classification

The appellate tribunal rejected the Revenue's appeal, affirming the decision to set aside the demand for service tax on the activity of keeping vehicles for banks and finance agencies. The tribunal emphasized that since the respondents were taxed under business support services from 1.6.06, the Revenue's argument that the same activity constituted storage and warehousing services before that date was untenable. Therefore, the activity was categorized as providing open space for parking rather than storage and warehousing, leading to the dismissal of the Revenue's appeal.

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Issues:
1. Whether keeping vehicles on behalf of banks and finance agencies amounts to storage and warehousing services liable to service tax.

Analysis:
The dispute in the present appeal revolves around determining whether the activity of keeping vehicles on behalf of banks and finance agencies constitutes storage and warehousing services subject to service tax. The respondents were engaged in storing vehicles for banks whose owners had defaulted on loans, leading the financial institutions to take custody of the vehicles. The Revenue argued that this activity fell under storage and warehousing services, issuing a show cause notice for service tax payment amounting to Rs.8,05,813/- and education cess of Rs.11,580/- for the period 2002-2006. The original adjudicating authority upheld the demand and imposed a penalty, but the Commissioner (Appeals) later set aside this decision, categorizing the activity as providing open space for parking rather than storage and warehousing.

Upon reviewing the case, the appellate tribunal noted that the respondents had registered with the Service tax department under 'business auxiliary services' from 1.6.2006 and had been paying service tax accordingly since that date. Notably, the Revenue had accepted this registration and tax payment without objection. Citing a precedent in the case of BCCI vs. CST Mumbai, the tribunal emphasized that when a tax is imposed on a specific activity from a particular date, that activity cannot be retroactively categorized differently. Therefore, the tribunal concluded that since the respondents were taxed under business support services from 1.6.06, the Revenue's argument that the same activity constituted storage and warehousing services before that date was untenable. Consequently, the tribunal rejected the Revenue's appeal based on this ground, affirming the Commissioner (Appeals) decision to set aside the demand for service tax on the disputed activity.

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