2018 (8) TMI 1285 - AT - Service Tax

Storage and warehousing services - appellants had been appointed as custodian of imported edible oils under Customs Act, 1962 and had rented/leased out their storage tanks in Kakinada for storage of the imported edible oils to those importers who availed the facility of storing imported oils in these storage tanks - case of appellant is that they are only renting out their storage facilities and is not covered under storage and warehousing services . Held that - On perusal of agreement and invoices raised by the appellant on M/s AAL, it is noticed that appellant was charging an amount as tank rental charges from M/s AAL. It is also seen from the records that M/s AAL have charged cargo handling charges from the appellant for storing and handling their consignments of edible oils which are stored in the said tanks - There is nothing on record to show that appellant herein had besides collecting rental charges from M/s AAL had rendered other services and collected any further amount. Similar issue came up before the Tribunal in the case of Finolex Industries Ltd (supra) (wherein, one of us, M.V.Ravindran was a member) 2007 (5) TMI 27 - CESTAT,MUMBAI has held that mere collection of an amount for leasing of the tanks for the usage of storage tanks cannot be considered as providing of storage and warehousing services - The said decision of the Tribunal was sought to be distinguished by the Learned Commissioner on the ground that M/s BPCL is user of the tanks, hence, the facts are different. In our view, such distinguishing factor may not carry the case of the Revenue any further. The amount collected by the appellant herein would not qualify for taxing under storage and warehousing services - Appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant is required to discharge service tax on amounts received from M/s AAL for storage and warehousing services during a specific period.

Analysis:
The case involved the appellant, a manufacturer of refined edible oils, who had rented out storage tanks to importers and appointed M/s AAL to provide cargo handling services. The authorities demanded service tax from the appellant for the period in question. The appellant argued that they were only renting out storage facilities and not providing storage and warehousing services as per a CBEC circular. The adjudicating authority upheld the demand, which was also confirmed by the first appellate authority.

The appellant contended that M/s AAL was responsible for the entire cargo handling process, and the appellant was only receiving a fixed sum for renting out the premises. They relied on previous tribunal decisions to support their argument. On the other hand, the Revenue argued that the appellant, being a custodian of imported goods, was providing security services, which fell under storage and warehousing services. They distinguished previous cases based on the nature of rent collection.

After considering both sides' submissions and reviewing the agreements and invoices, the tribunal found that the appellant was primarily collecting rental charges and not providing additional services covered under storage and warehousing services. The tribunal referred to a Board circular clarifying that mere renting of space without additional services does not constitute storage and warehousing services. They also cited a previous tribunal case where a similar situation was deemed not taxable under storage and warehousing services.

In light of the factual and legal analysis, the tribunal held that the appellant was not liable to pay service tax on the amounts received from M/s AAL. They set aside the impugned order and allowed the appeal, emphasizing that the appellant's activities did not fall under the definition of storage and warehousing services.

This detailed analysis of the judgment highlights the key arguments, legal interpretations, and conclusions reached by the tribunal regarding the issue of service tax liability on amounts received for storage and warehousing services.