TaxTMI 
TaxTMI 
2011 (3) TMI 235
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....ngalore are transferred to Hassan by a pipeline where they are stored in tanks belonging to the appellant M/s. Hindustan Petroleum Corporation Ltd. (HPCL). Parcels of different petroleum products received by HPCL are delivered to M/s. Bharat Petroleum Corporation Ltd. (BPCL) or Indian Oil Corporation Ltd. (IOCL) depending on the indent of these oil marketing companies on MRPL. Till the products are delivered from the warehouse, HPCL keeps them in their warehouse at Hassan. HPCL charges the oil companies for warehousing petro­leum products eventually delivered to them. HPCL is registered with the department as a provider of output service falling under 'Storage and Warehousing'. A pipeline has been laid connecting Mangalore and Hassan by....
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.... and around the State of Karnataka. While most of the dispatches are trans­ferred through coastal vessels, tank wagons, etc., pipeline transfer was found to be the most efficient and a joint venture company M/s. Petronet MHB Ltd. was floated. Petronet constructed the pipeline between Mangalore and Bangalore via Hassan. HPCL has an oil terminal at Hassan. It was agreed among the three oil companies, viz., HPCL, IOCL and BPCL that they would jointly maintain a quantity of 38800 kilolitres of petroleum product in the pipeline at any time, being the minimum quantity to make transfer through pipeline possible. Since HPCL contributed its share of the products retained in the pipeline, it claims that the transportation service used by HPCL to ....
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....arsported for warehousing by the assessee and the assessee's activity of providing storage and warehousing service in respect of the products belonging to the other oil companies will not be possible. Therefore, transportation of petroleum products belonging to HPCL through the pipeline is not independent and is an activity relating to business of storage and warehousing rendered by the assessee. 3.2 They cite the definition of 'input service' contained in rule 2(l) and submit that the impugned activity of transportation of petroleum products involved taxable service of transportation and is input for providing storage and warehousing service. In the inclusive part of the definition in rule 2(l) 'input service' includes activities relati....
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..... CCE [2010] 26 STT 405 (Bang. - CESTAT) (iv) ITC Ltd. v. CCE [2009] 22 STT 282 (Bang. - CESTAT). 4. Heard both sides. 5. During hearing, the learned counsel for the appellants submit­ted that every consignment of petroleum product dispatched by MRPL comprises portions meant for HPCL, BPCL and IOCL as agreed among them. He submitted that unless all the OMCs bought part of every consignment and moved the same, transport of petroleum products through the pipeline will not be feasible. As the appel­lant rendered storage and warehousing service in respect of parcels of petroleum products meant for IOCL and BPCL, transpor­tation and the warehousing of those goods were possible only if HPCL also transported a shar....
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....t equally. Each oil company has to maintain its share of line fill quantity. The contention before the Commissioner was that the activity of transportation of petroleum products of IOCL and BPCL and of the assessee were an integral activity, as the pipeline had to be shared by all the three petroleum companies. The freight charges for the transportation through pipeline and the Service Tax thereon were paid by the respective companies in respect of the petroleum products received by each. On this aspect, the show-cause notice only stated that the three OMCs used the same pipe­line for transporting petroleum products from Mangalore to Hassan and each of them paid freight charges to the transporter in respect of products transported by ea....
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....eline filled to capacity before and after the transfer. The transfer of any quantity will be possible even if the shares of the three oil companies in the pipeline before and after conveying a consign­ment are different. A consignment belonging to the three differ­ent OMCs in any proportion as per indents placed can also be conveyed simultaneously considering that the separate quantities can be distributed by HPCL on receipt in its Hassan terminal. From the records, it is not obvious as to how the transportation is arranged and what is the agreement among the three oil compa­nies for us to arrive at a conclusion as to whether it's a tech­nical imperative for HPCL to incur transportation cost and Service Tax for similar or di....