2012 (4) TMI 82 - AT - Service Tax

Demand - Classification - Business Auxiliary Service or storage and warehousing - During the pendency of the application for centralized registration, the anti-evasion wing at Bangalore initiated investigation against the branch office of the appellant at Bangalore for evasion of service tax - another show-cause dated 16.04.2007 was issued demanding service tax amounting to ₹ 3,14,81,709/- for the period from 01.10.2005 to 30.09.2006 as the same formed as in the previous notice and the case was assigned to Commissioner of Central Excise, Thane I for adjudication - Ld. Advocate for the appellant submits that the provisions relating to storage and warehousing under section 65(102) and 65(105)(zza) of the Finance Act, 1994 applies only in respect of good as defined in the Sale of Goods Act, 1930 Whether the records such as discharged cheques, vouchers, deeds, agreements, books of accounts of banks and corporate houses would come under the category of goods as per the provisions of section 2(7) of the Sale of Goods Act, 1930 or not - it is clear that to constitute goods, saleability is an essential criteria. If saleability was not a relevant criterion, there was no necessity to refer to the definition of goods, under the Sale of Goods Act, 1930. Sale of Goods Act governs sale and purchase of goods - the various old records such as discharged cheques, vouchers, books of accounts in respect of which the service was rendered by the appellant to his clients such as banks and corporate houses for management of the records, cannot be considered as storage and warehousing of goods as defined in the Finance Act, 1994 read with section 2(7) of the Sale of Goods Act, 1930 - Decided in favor of the assessee

Summary

Issues:
1. Whether the activity undertaken by the appellant falls under the category of taxable service of "storage and warehousing" for the purpose of service tax liability.
2. Whether the records such as discharged cheques, vouchers, agreements, books of accounts of banks and corporate houses constitute "goods" as per the Sale of Goods Act, 1930.

Analysis:
1. The appellant, registered for service tax under "Business Auxiliary Service," applied for centralized registration. The department initiated an investigation for evasion of service tax on charges like segregation, packing, storage, and retrieval. The department argued the activity falls under taxable service of "storage and warehousing." Show-cause notices were issued, leading to an adjudication by the Commissioner dropping the proceedings based on the non-saleable nature of the records. The revenue appealed against this order.

2. The definition of "goods" under the Sale of Goods Act, 1930 was crucial in determining tax liability. The appellant argued that since the records were not marketable, they did not qualify as goods. Citing the R.D.Saxena case, the appellant contended that goods must be saleable for tax purposes. The revenue, however, maintained that records like cheques and vouchers are movable property and thus qualify as goods. The key question was whether the records constituted goods under the relevant legal definitions.

3. The tribunal analyzed the definitions of storage and warehousing services, goods, and the Sale of Goods Act. Emphasizing the necessity of saleability for something to be considered goods, the tribunal referred to the R.D.Saxena case where non-marketable files were not equated with goods. The tribunal held that the old records managed by the appellant for clients did not meet the criteria of goods under the Sale of Goods Act. Consequently, the tribunal ruled in favor of the appellant, stating they were not liable to pay service tax for the activity related to storing old records. The appeal by the appellant was allowed, and the revenue's appeal was dismissed.