Tribunal Upheld Service Tax on Storage Tank Installation Charges

The Tribunal upheld the service tax liability on facility charges collected for storage tank installation under the category of 'supply of Tangible goods service'. The appellant's argument that the charges were associated with the sale of gas and thus exempt from service tax was rejected. The Tribunal emphasized the need to verify payment of sales tax on the collected amount. A 20% pre-deposit of the service tax demand was required for the stay application. Failure to comply within the specified timeline would result in dismissal of the appeal, highlighting the importance of meeting pre-deposit conditions for appeal validity.

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Issues:
1. Liability to pay service tax on facility charges collected for installation of storage tanks.
2. Applicability of service tax under the category 'supply of Tangible goods service' on facility charges.
3. Challenge against the order confirming service tax demand, interest, and penalties.
4. Denial of liability based on payment of sales tax on the amount collected.
5. Consideration of waiver of pre-deposit in the stay application.

Analysis:
The appellant, engaged in manufacturing and supplying gases, installed storage tanks at customer premises and collected facility charges during a specific period. The department contended that these charges are liable to service tax under the category of 'supply of Tangible goods service' as per the Finance Act, 1994. A show cause notice was issued, resulting in the confirmation of a service tax demand, interest, and various penalties. The appellant challenged this order, but the Commissioner (Appeals) upheld the demand. The appellant, during the stay application, argued against the service tax liability on grounds of no service being involved and payment of sales tax on the collected amount.

The appellant maintained that the facility charges were associated with the sale of excisable goods, i.e., gas, and therefore should not attract service tax. Conversely, the department highlighted that the storage tanks, though installed at customer premises, remained the appellant's property, indicating a lack of effective control by customers. The Tribunal acknowledged the need to examine whether sales tax was paid on the collected amount to determine the applicability of service tax. Consequently, the Tribunal decided that a pre-deposit of 20% of the service tax demand was sufficient for compliance with the Central Excise Act, allowing the stay application on this condition.

In the absence of full compliance with the pre-deposit condition within the specified timeline, the appeal was set to be dismissed without further notice. The judgment emphasized the importance of adhering to the pre-deposit requirement for maintaining the appeal's validity. The decision balanced the considerations of service tax liability, ownership of installed equipment, and the necessity of pre-deposit for legal compliance.

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