2008 (7) TMI 187 - AT - Service Tax

Licence fee collected by the applicant from the dealers for renting out the premises for sale of petroleum products demand raised under the category of services Storage and Warehousing - facts are not very clear as to whether the licence fee is for operating the petrol pump or otherwise in view of decision of Tribunal in the case of Finolex Industries Ltd., applicant has made out a prima facie case for waiver of amount of service tax and the penalties involved

Summary

Issues:
1. Waiver of service tax and penalties imposed on the applicant for renting out premises for sale of petroleum products under the category of "Storage and Warehousing."

Analysis:
The judgment by the Appellate Tribunal CESTAT, Mumbai, involved a case where the applicant sought a waiver of service tax and penalties imposed on them for renting out premises for the sale of petroleum products under the category of "Storage and Warehousing." The Tribunal considered the submissions from both sides and examined the records. The demand for service tax was upheld based on the agreement between the applicant and the dealers, where the applicant, as the absolute owner of the premises, collected a license fee for storage of petroleum products.

The applicant argued that the agreement clearly showed that the fee collected was for the use of the sites by the dealers. Additionally, the applicant referenced a previous decision of the Tribunal in the case of Finolex Industries Ltd v. CCE [2007] 10 STT 31 (Mum.-CESTAT) to support their case. On the other hand, the Judicial Department Representative (JDR) contended that the entire premises were owned by the applicant, and they were indeed storing petroleum products, with the Commissioner (Appeals) finding that the collected fee was for storage and warehousing purposes.

Upon reviewing the agreement and the records, the Tribunal observed that the amount collected by the applicant appeared to be in the form of a license fee. While there was some ambiguity regarding whether the fee was for operating the petrol pump or other purposes, the Tribunal noted that the issue might align with the precedent set in the Finolex Industries Ltd case. Consequently, the Tribunal concluded that the applicant had established a prima facie case for the waiver of service tax and penalties. Therefore, the application for the waiver of pre-deposit of service tax and penalties was granted, and the recovery thereof was stayed pending the appeal's disposal.