2013 (11) TMI 912 - AT - Service Tax

Storage or warehouse keeper recipient of service from foreign party i.e. PROSAFE Held that - In terms of the agreement, PROSAFE was responsible for maintaining floating storage and offloading unit system and was to operate the system efficiently to receive storage and deliver correctly in accordance with the specification and operating requirements. That does not bring the activity of PROSAFE squarely within the fold of Section 65 (105) (zza) as a storage or a warehouse keeper - Being an agent of the process of production, it was not a storage or warehouse keeper. Therefore, service was not provided by the foreign agency as storage or warehouse keeper - appellant shall not be liable to pay service tax as the recipient of service of the nature not falling within the purview of Section 65 (105) (zza) of Finance Act 1994 read with Section 65 (102) - Following decision of Aban Loyd Chiles Offshore Ltd. Versus Commissioner of Service Tax, Chennai 2012 (7) TMI 287 - CESTAT, CHENNAI - Decided in favour of assessee.

Summary

Issues:
Waiver of pre-deposit of tax under the category of Storage and Warehousing Activity.

Analysis:
The judgment pertains to an application for waiver of pre-deposit of tax amounting to Rs.4,67,62,808/- along with interest and penalties in a case involving Storage and Warehousing Activity. The Tribunal considered the applicant's use of a Floating Production Unit (FPU) belonging to a foreign entity for drawing crude oil from subsea wells in the sea. The Tribunal noted that in a previous case concerning the same issue, the Tribunal had allowed the appeal, emphasizing the necessity for the Revenue to establish that the service provided falls under the category of storage and warehousing as defined in Section 65 (102) of the Finance Act 1994. The Tribunal highlighted that the foreign agency responsible for maintaining the FPU was not acting as a storage or warehouse keeper but rather as part of the production process, thus not falling within the purview of the taxing entry under Section 65 (105) (zza). Consequently, the appellant was found not liable to pay service tax, and the appeal was allowed.

The Tribunal, based on the precedent set in the earlier case, decided to waive the requirement of pre-deposit of tax, interest, and penalties, and stayed the collection during the pendency of the appeal. The decision was made in line with the interpretation of the relevant provisions of the Finance Act 1994 and the specific nature of the services provided by the foreign agency, emphasizing the distinction between storage and warehousing activities and other operational responsibilities. The Tribunal's decision was guided by the legal definitions and requirements outlined in the legislation, ensuring a thorough analysis of the facts and the applicable law to arrive at a just and reasoned outcome.