2010 (12) TMI 121 - AT - Service Tax

Demand Show cause notice has been issued on the ground that assessee has godown and they were providing storage and warehousing facility - Assessee had not provided any storage and warehousing services and had given godown on rent to Nestle India Limited They have submitted the copy of rent agreement - Department itself for the period w.e.f. 1.10.2007 is treating the services provided by the respondent as the services of renting of immovable property not as storage and warehousing services Appeal is dismissed

Summary

Issues:
Service tax liability for storage and warehousing services provided by the respondent. Imposition of penalties under Sections 76 and 78 of the Finance Act, 1994.

Analysis:
The case revolved around the service tax liability of the respondent for providing storage and warehousing services to Nestle India Ltd. A show cause notice was issued alleging tax liability from 16.08.2002 to 31.12.2005. The Asstt. Commissioner confirmed the tax demand, imposed penalties under Sections 77 and 76, but omitted to impose a penalty under Section 78 initially. Subsequently, a rectification order was issued imposing a penalty under Section 78. The Commissioner (Appeals) upheld the penalty under Section 78 but set aside the penalty under Section 76. The department appealed this decision, arguing that penalties under both sections could be imposed simultaneously during the relevant period.

The respondent contended that they had rented the godown to Nestle India Ltd. under a rent agreement, not provided storage and warehousing services. They highlighted that renting of immovable property became taxable only from 1.6.2007, as evidenced by a show cause notice issued later. The respondent's turnover during the disputed period was below the threshold for service tax, as acknowledged by the Dy. Commissioner. The respondent argued that since the services provided were renting of immovable property, not storage and warehousing, there was no basis for penalty under Section 78.

Upon hearing both sides, the Tribunal found that the respondent had indeed rented the godown to Nestle India Ltd. based on the rent agreement and certificates provided. The Department itself treated the services as renting of immovable property from 1.10.2007 onwards. Therefore, the Tribunal concluded that the services during the disputed period could not be classified as storage and warehousing services. Consequently, the imposition of service tax and penalties under Section 76 were deemed incorrect. The Tribunal dismissed the department's appeal and disposed of the respondent's cross objection accordingly.