2014 (1) TMI 94 - AT - Service Tax

Waiver of pre deposit - Demand of service tax - Receipt of storage and warehousing service from the foreign service provider - Reverse charge mechanism - Held that - applicants are importing helium gas in the tanks and the tanks are subsequently re-exported. There is no evidence to show that the supplier of gas has any responsibility in respect of the gas exported in tanks in the factory of the applicants - In respect of the rental charges received by the applicants from their clients in respect of the tanks in which the gas is supplied, we find that the applicants are paying excise duty on the rental charges, therefore we find that the applicants have made out a strong case in their favour. Therefore, the pre-deposit of the dues is waived and recovery of the same is stayed during the pendency of the appeals - Stay granted.

Issues involved:
1. Liability to pay service tax on storage and warehousing services received from a foreign service provider.
2. Liability to pay service tax for providing storage and warehousing services to clients.
3. Importation and storage of helium gas under controlled conditions.
4. Payment of excise duty and VAT on rental charges for storage tanks.
5. Interpretation of terms and conditions of agreements regarding gas supply responsibilities.
6. Applicability of service tax on rental charges for tanks used in gas supply.
7. Waiver of pre-deposit and stay of recovery during appeal proceedings.

Analysis:

Issue 1: Liability for service tax on storage and warehousing services received from a foreign service provider:
The Tribunal considered multiple appeals where the demand for service tax was confirmed based on the grounds that the applicants were receiving storage and warehousing services from a foreign service provider, thus liable for service tax under the reverse charge mechanism. However, the applicants argued that they were importing helium gas for manufacturing purposes under controlled conditions and were not receiving any storage or warehousing service from the foreign provider. The Tribunal found that the applicants were importing gas in tanks and subsequently re-exporting them, with no evidence of the supplier's responsibility for the gas stored at the applicants' factory. Consequently, the demand for service tax on this ground was deemed unsustainable.

Issue 2: Liability for providing storage and warehousing services to clients:
In a separate appeal, the demand for service tax was confirmed on the basis that the applicants were providing storage and warehousing services to their clients, making them liable for service tax. The applicants contended that they were paying excise duty and VAT on the rental charges for the tanks where the gas was stored, which was supported by invoices and a previous stay order. The Tribunal found the demand unsustainable, considering the excise duty and VAT payments made by the applicants on the rental charges.

Issue 3: Importation and storage of helium gas under controlled conditions:
The applicants imported helium gas for manufacturing purposes, paying appropriate customs duty and utilizing the gas in the production of other gases. The gas was stored in tanks at their factory and subsequently re-exported within six months. The Tribunal acknowledged the controlled temperature requirements for transporting the gas and the manufacturing process involving the imported gas, leading to the finding that the demand for service tax was not justified.

Issue 4: Payment of excise duty and VAT on rental charges for storage tanks:
Regarding the payment of excise duty and VAT on the rental charges for the storage tanks where the gas was stored, the applicants presented evidence of compliance through invoices and previous tribunal orders. The Tribunal considered the excise duty and VAT payments made by the applicants on the rental charges as a strong case in their favor, leading to the waiver of pre-deposit and stay of recovery during the appeal proceedings.

Issue 5: Interpretation of terms and conditions of agreements regarding gas supply responsibilities:
The Revenue relied on the terms and conditions of agreements between the applicants and their clients to argue that the responsibility of the applicants extended to the supply of gas up to a certain point in the factory, making them liable for service tax. However, the Tribunal found in favor of the applicants, considering their compliance with excise duty and VAT payments on the rental charges for the tanks used in gas supply.

Issue 6: Applicability of service tax on rental charges for tanks used in gas supply:
The Revenue contended that the rental charges received by the applicants for the tanks used in gas supply were not liable for excise duty and thus subject to service tax. However, the Tribunal found that the applicants' payment of excise duty on the rental charges supported their case, resulting in the waiver of pre-deposit and stay of recovery during the appeal proceedings.

Issue 7: Waiver of pre-deposit and stay of recovery during appeal proceedings:
After considering the arguments and evidence presented by both parties, the Tribunal found in favor of the applicants, waiving the pre-deposit of dues and staying the recovery during the pendency of the appeals. The appeals were listed for further hearing on a specified date.

This detailed analysis of the judgment highlights the various issues involved, the arguments presented by the parties, and the Tribunal's findings and decisions on each issue, ensuring a comprehensive understanding of the legal aspects and reasoning behind the judgment.

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