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of <h1>Court sets aside VAT assessment on terminalling services due to prior service tax payment. Reassessment ordered to prevent double taxation</h1> <h3>SHV Energy Private Limited Versus The State of Tamil Nadu, The Commissioner of Commercial Taxes, LTU, The Deputy Commissioner (Commercial Tax) -IV, LTU</h3> SHV Energy Private Limited Versus The State of Tamil Nadu, The Commissioner of Commercial Taxes, LTU, The Deputy Commissioner (Commercial Tax) -IV, LTU - ... Issues:Challenge to assessment order demanding VAT on terminalling services provided to a corporation under TNVAT Act, 2006.Analysis:1. The petitioner contested an assessment order demanding VAT on terminalling services provided to a corporation under the TNVAT Act, 2006. The petitioner operated an LPG storage and distribution facility at Tuticorin Port, offering terminalling and storage services. The assessment order concluded that the petitioner transferred the right to use their storage facility to the corporation, thus liable for VAT. The petitioner argued against this, stating no transfer of right occurred, and service tax was already paid for the services rendered.2. The petitioner's primary contention was that the same transaction cannot be taxed under both service tax and VAT. They emphasized the non-exclusive nature of the contract and the usage of the facility by multiple entities. Reference was made to the definition of 'storage and warehousing' under the Finance Act, highlighting that the assessment's findings were not sustainable based on this definition.3. The petitioner relied on a Supreme Court case emphasizing the importance of deliverable goods for the transfer of the right to use goods. They also cited a Delhi High Court case to support their argument that only specific contracts provided under the law could be taxed, not composite contracts. The petitioner contended that the assessment was based on a misconception of the legal position.4. The Government Advocate defended the assessment, stating that the Assessing Officer correctly concluded the transfer of the right to use the storage facility, justifying the VAT imposition. The court, after hearing both parties, found that the Assessing Officer failed to address the crucial aspect of the petitioner already discharging service tax liability, raising concerns of double taxation. The court also noted the absence of consideration for the non-exclusivity of the agreement and the fixed nature of the installation in the assessment.5. Consequently, the court set aside the assessment on terminalling services provided to the corporation and remanded the matter for reassessment, considering the legal position, circular issued by the Central Board, factual details, and the non-exclusivity of the agreement. The court emphasized that the petitioner should not be subjected to double taxation and directed a re-assessment under the observations made in the order.In conclusion, the court allowed the writ petition, setting aside the assessment and remanding the matter for a fresh assessment under the specified considerations, ensuring the petitioner is not subjected to dual levies of sales tax and service tax.
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