2006 (9) TMI 12 - AT - Service Tax

Service Tax Storage and Warehousing service Levy imposed under u/s 28A of Madhya Pradesh Excise Act was in the context of supervision provided by Excise Staff over storage of IFML in warehouse, is no way comparable with the charges of Storage and Warehouse Services On such charges service tax is not leviable

Summary

Issues:
1. Appellate Tribunal hearing identical issues in two appeals.
2. Imposition of penalties for failure to register and furnish ST-3 return.
3. Whether Excise Department providing taxable service.
4. Interpretation of Article 289 of the Constitution.
5. Dispute over Service Tax on supervision charges.
6. Applicability of Storage & Warehousing Services under Section 65 (102).
7. Levy of supervision charges under Section 28-A of the Madhya Pradesh Excise Act, 1915.
8. Exemption of State income from Union taxes under Article 289.
9. Comparison of supervision charges with Storage & Warehousing Services.

Analysis:
1. The appeals were consolidated as they involved similar issues. The penalties were imposed for not registering and filing ST-3 return as per the Finance Act, 1994. The Commissioner (Appeals) upheld the penalties, emphasizing the liability for service tax on services provided by the Excise Department.

2. The question of whether the Excise Department was providing taxable services was examined. The Deputy Commissioner ruled that the warehousing of liquor fell under "Storage and Warehousing Service" subject to Service Tax, rejecting the contention of exemption under Article 289 (1) of the Constitution.

3. The interpretation of Article 289 was crucial. It was clarified that the Union could levy customs and excise duties on goods imported or manufactured by a State, irrespective of trade or business purposes, as per the Supreme Court decision. This interpretation supported the imposition of Service Tax on the supervision charges.

4. The dispute over Service Tax on supervision charges arose from the definition of "Storage & Warehousing" under Section 65 (102). The charges imposed by the State Government were considered as taxable services falling under the ambit of Service Tax, leading to the demand for payment.

5. The levy of supervision charges under Section 28-A of the Madhya Pradesh Excise Act, 1915 was analyzed. It was concluded that these charges were not for Storage & Warehousing Services but for supervision purposes, exempting them from being considered as consideration for storage services.

6. The judgment highlighted the exemption of State income from Union taxes under Article 289, emphasizing that the levy imposed by the State law for supervision did not align with charges for Storage & Warehousing Services, thereby nullifying the impugned orders against the appellants.

7. Ultimately, both appeals were allowed, setting aside the penalties and demands for Service Tax on supervision charges. The decision was based on the distinct nature of the charges imposed by the State Government, not constituting consideration for Storage & Warehousing Services as per the legal provisions and interpretations provided.