Taxability of buffer stock storage as warehousing service was found doubtful, supporting waiver of pre-deposit and stay of recovery.

Storage of sugar as buffer stock under Government instructions, with compensation received for that activity, was considered in the context of taxable storage and warehousing service under the Finance Act, 1994. The Tribunal treated the issue as covered by an earlier decision holding that such storage did not fall within warehousing service and was not liable to service tax. On that basis, the appellant was found to have a strong prima facie case for interim relief, leading to waiver of pre-deposit of duty and penalty and stay of recovery.

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Issues: Whether storing sugar as buffer stock under Government instructions, for which compensation was received, amounted to taxable storage and warehousing service under the Finance Act, 1994, so as to justify waiver of pre-deposit and stay of recovery.

Analysis: The issue was treated as covered by an earlier Tribunal decision holding that such activity did not fall within warehousing service and did not attract service tax. On that basis, the appellant was held to have a strong prima facie case for interim relief.

Conclusion: The storage activity was not treated as taxable warehousing service at the interim stage, and pre-deposit of duty and penalty was waived with recovery stayed.

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