2018 (6) TMI 198 - AT - Service Tax

Service tax on the lease rentals under Storage and Warehousing Services - on such lease Rentals appellants are paying VAT/CST - Held that - It is the containers / bullets in which the LPG is stored that is leased out to the customers. The lease is in the nature of right to use these bullets for storage. As per clause 1.3 of the contract, it is the customers who are responsible for carrying out connection from the tap off point to various equipments installed by customer for use of LPG. The storage units are installed in the customer s premises and appellants do not have any control over the LPG stored in them. Similar issue was decided in the case of Inox Air Products vs. Commissioner of Central Excise, Raigad 2015 (1) TMI 460 - CESTAT MUMBAI , where it was held that as the appellant is not having any control over the goods and they are not responsible for the security of the goods, the appellant is not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994. The demand cannot sustain - appeal allowed - decided in favor of appellant.

Summary

Issues:
Interpretation of service tax liability on lease rentals for storage services.

Analysis:
The appellants were involved in integrated LPG services, including storage facilities at customer premises. The dispute arose when the department claimed service tax on lease rentals under 'Storage and Warehousing Services'. The original authority confirmed the demand, interest, and penalties. In appeal, the Commissioner upheld the decision, leading to the current appeal.

The appellant argued that lease rentals were for the right to use storage units called 'bullets' for LPG supply, which were the appellant's property. The appellant paid VAT/CST on these rentals as 'deemed sales'. Citing the decision in Inox Air Products Ltd. vs. Commissioner of Central Excise, the appellant contended that lease rentals were not subject to service tax.

The department, represented by the ld. AR, supported the findings of the impugned order. After hearing both sides, the Tribunal analyzed the nature of the lease, focusing on the customers' responsibility for connecting equipment and the lack of control by the appellants over the stored LPG. Referring to the Inox Air Products case, the Tribunal emphasized that the crucial factor was the transfer of goods to the customer.

Based on the facts and precedent, the Tribunal concluded that the appellants did not fall under the category of 'Storage and Warehousing Services' for service tax purposes. Citing the lack of control over the goods stored and the transfer of responsibility to the customer, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief, if any.