2015 (1) TMI 460 - AT - Service Tax

Tribunal rules in favor of appellant, setting aside service tax demand for Storage and Warehousing Services.

The Tribunal ruled in favor of the appellant, setting aside the service tax demand for Storage and Warehousing Services. It was determined that the ... Definition of Storage and Warehousing Services under Section 65(102) of the Finance Act, 1994 - taxability of renting storage tanks - control and responsibility for goods as determinative test for storage servicesDefinition of Storage and Warehousing Services under Section 65(102) of the Finance Act, 1994 - control and responsibility for goods as determinative test for storage services - taxability of renting storage tanks - Whether the appellant's activity of providing and charging rent for storage tanks installed at customers' premises attracts service tax as Storage and Warehousing Services. - HELD THAT: - The Tribunal held that the determinative test for characterising an activity as Storage and Warehousing Services is whether the service-provider retains control or responsibility for the goods stored. The facts show that the gas stored in the tanks at the buyer's premises was transferred to the buyer and, thereafter, the appellant did not retain control over the goods, nor was it responsible for security of the goods. Although the appellant supplied and maintained the storage tanks, including wear and tear and insurance, the goods themselves remained with the buyer after transfer. On these findings, the activity of renting the storage tank did not amount to provision of storage and warehousing service as defined under the statute, and therefore was not taxable as such.Impugned service-tax demands under the category of Storage and Warehousing Services set aside; appeals allowed.Final Conclusion: The Tribunal concluded that renting and maintaining storage tanks installed at customers' premises, where the goods are transferred to the buyer and the appellant does not retain control or responsibility for the goods, does not constitute a taxable Storage and Warehousing Service; the impugned demands were set aside and the appeals allowed. Issues:Service tax demand confirmed for Storage and Warehousing Services.Analysis:The appellants appealed against the order confirming service tax demand for Storage and Warehousing Services from August 16, 2002, to March 2012. The case involved the appellant providing storage tanks to customers for storing gases like oxygen, nitrogen, and argon at -269^0C. The appellant charged rent for the storage tanks and maintained them, paying Central Excise duty and VAT on the rent. The Revenue argued that the rent charged fell under 'Storage and Warehousing Services' as per Section 65(102) of the Finance Act, 1994, initiating proceedings against the appellant. The appellant contended they were merely renting out storage tanks and not providing storage and warehousing services, as they did not control the goods stored in the tanks. The appellant also argued against double levy of duty, citing a Tribunal decision in a similar case.The Chartered Accountant representing the appellant argued that they did not provide storage and warehousing services as they did not control the goods stored in the tanks, which were under the buyer's control. The appellant did not maintain an inventory of the goods and therefore should not be liable to pay service tax under the said category. The appellant had already included the rent charge in the assessable value of excisable goods, so double levy of duty was unwarranted. The appellant also referenced a previous Tribunal decision to support their case. On the other hand, the Additional Commissioner opposed the appellant's argument, stating that the storage tanks were under the appellant's control as they were responsible for maintenance and insurance, making them liable for service tax under Storage and Warehousing Services as per Section 65(102) of the Finance Act, 1994.After hearing both parties, the Tribunal analyzed the case to determine the taxability of the service provided. It was observed that once the goods were transferred to the buyer and stored in the tanks, the appellant had no control over the goods, and the buyer held full responsibility. As the appellant did not control the goods or ensure their security, they did not fall under the category of Storage and Warehousing Services as defined in Section 65(102) of the Finance Act, 1994. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, providing for consequential relief if necessary.