Tribunal rules in favor of Punjab Govt undertaking in service tax appeal

The Tribunal ruled in favor of the appellant, an undertaking of the Government of Punjab, in an appeal against the demand of service tax under 'Renting of Immovable Property Service' for letting out warehouses to the Food Corporation of India. The Tribunal determined that the services provided fell under storage and warehousing, exempt from service tax under relevant provisions of the Finance Act, 1994. Consequently, the impugned order demanding service tax, interest, and penalty was set aside, and the appellant was not liable to pay service tax under the categories in question. The appeal was allowed with any consequential relief.

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Issues:
Appeal against demand of service tax under 'Renting of Immovable Property Service' for letting out godowns for storage purpose.

Analysis:
The appellant, an undertaking of the Government of Punjab, appealed against the demand of service tax under 'Renting of Immovable Property Service' for letting out warehouses to the Food Corporation of India. The department alleged that this activity attracted service tax under the Finance Act, 1994. The appellant contended that the activity fell under storage and warehousing, not renting of immovable property. The impugned order demanded service tax, interest, and penalty. The appellant argued that a previous Tribunal order had dropped a similar demand, stating the service was used for storage of food grains.

The Tribunal examined the terms of agreement between the appellant and FCI, which focused on providing space for storage, record-keeping, insurance, and security services. The Tribunal noted that the services provided by the appellant fell under storage and warehousing, exempt from service tax under Section 65 (105) zza) of the Finance Act, 1994. The Tribunal cited Clause (d) of Section 66D, the negative list of services, which exempted services related to agriculture or agricultural produce, including renting or leasing of vacant land. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant.

In conclusion, the Tribunal found that the appellant's services qualified as storage and warehousing, exempt from service tax under relevant provisions of the Finance Act, 1994. The appellant was not liable to pay service tax under the categories of 'Renting of Immovable Property Service' or 'Storage and Warehousing Service.' The impugned order was set aside, and the appeal was allowed with any consequential relief.

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