2015 (5) TMI 212 - AT - Service Tax

Storage and Warehousing Service provided in relation to Gas / Liquid gas - Invocation of extended period of limitation - Imposition of penalty u/s 78 - Held that - From the letter dtd 7.11.2011 of the Manager of the appellant company addressed to the Deputy Commissioner, Service Tax, it is found that on account of situational problem and commercial experience the appellant company are sharing the common expenses incurred for usage of storage tank to store HCN received from M/s RIL and. other expenses. Storage and Warehousing Service defined under Section 65(102) of Finance Act 1994 means Storage and Warehousing includes storage and Warehousing Services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage, The taxable service of Storage, and Warehousing Service under Section 65(105)(zza) of Finance Act 1994 means any service provided or to be provided to any person, by storage or in relation to storage and warehousing of goods. It is evident from the definition that the Service Tax is leviable on Storage and Warehousing Service for goods including liquids and gases. On the demand of Service Tax for the extended period is to be set aside. We do not find any material in respect of suppression of fact with intent to evade payment of tax. It is contended by the Learned Advocate that the appellant is a State Government undertaking and entered into agreement for sharing the common expenses with M/s GACL. There is no gain on the part, of the appellant. In our considered view, the demand of tax for the extended period of limitation cannot be sustained. Similarly, imposition of penalty under Section 78 is not warranted. - demand of service tax for the extended period and imposition of penalty under Section 78 are set aside - Decided partly in favour of assessee.

Summary

Issues involved:
Service tax liability on storage and warehousing services provided for goods including liquids and gases, applicability of extended period for tax demand, imposition of penalty under Section 78 of the Finance Act 1994.

Analysis:

Service Tax Liability on Storage and Warehousing Services:
The case involved the appellant engaged in the manufacture of specific chemicals classifiable under Chapter 29 of the Central Excise Tariff Act 1985. The appellant received Hydro Cynic Acid (HCN) from a supplier and partially utilized it in their factory, while the remaining quantity was supplied to another company adjacent to their premises. The consideration received for supplying HCN was termed as "incineration charges." The issue was whether this activity fell under the category of "Storage and Warehousing Services" liable for service tax. The Adjudicating Authority confirmed the demand of service tax, interest, and penalties, which was upheld by the Commissioner (Appeals).

Extended Period for Tax Demand and Imposition of Penalty:
The appellant contended that there was no storage or warehousing facility at their premises, and the activity was part of a continuous process for supplying gas to other companies. The appellant argued that there was no service provider-service receiver relationship between them and the company receiving the gas. However, the Revenue Authority reiterated the findings, emphasizing the admission of storage and supply of gas to the other company. The Tribunal analyzed the definition of "Storage and Warehousing Services" under the Finance Act 1994, concluding that the appellant's activities fell within this definition, making them liable for service tax.

Decision:
After considering the arguments from both sides and examining the records, the Tribunal found merit in the Revenue's submissions regarding the liability for service tax on storage and warehousing services provided by the appellant. However, the Tribunal agreed with the appellant's submission that the demand of service tax for the extended period should be set aside. It was noted that there was no evidence of suppression of facts to evade tax payment, and the appellant was a State Government undertaking sharing common expenses with the other company. Therefore, the demand for the extended period and the imposition of penalty under Section 78 were set aside. The appeals filed by the appellant were disposed of accordingly.

This comprehensive analysis of the judgment highlights the key issues, arguments presented by both parties, legal interpretations, and the final decision reached by the Tribunal.