2018 (10) TMI 972 - AT - Service Tax

Renting of immovable property service - undertaking of the Government of Punjab and owner of warehouses which have been rented by them to the Food Corporation of India of storage for food grains - Held that - The issue is decided in appellant own case PUNJAB STATE WAREHOUSING CORPORATION VERSUS CCE, CHANDIGARH 2018 (2) TMI 154 - CESTAT CHANDIGARH , where it was held that as these services are for agricultural produce, which is not in dispute, therefore, the appellant is not liable to pay service tax on Storage and Warehousing which has been exempted from service tax as per section 65 (105) zza) of the FA, 1994 - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax under renting immovable property service category.

Analysis:
The case involved an appeal against an order confirming the demand of service tax along with interest against the appellant under the renting immovable property service category. The appellant, an undertaking of the Government of Punjab, owned warehouses rented to the Food Corporation of India for storage of food grains. The department alleged that letting out warehouses to FCI attracted service tax under Section 65 (105 (zzzz) of the Finance Act, 1994. Show cause notices were issued, contended by the appellant that the activity should be classified as storage and warehousing under Section 65 (105 (zza) of the Finance Act, 1994. However, the adjudicating authority held it fell under renting immovable property service. Consequently, orders were passed to demand service tax, interest, and penalties. The appellant challenged these orders before the tribunal.

The appellant's counsel argued that in an earlier case, the tribunal had observed that the appellant was not liable to pay service tax for a similar activity. The tribunal examined the terms of the agreement between the appellant and FCI, noting the provision of space for storage, record-keeping, insurance, and security services. It was observed that the appellant provided various services beyond just space for storage, thus falling under storage and warehousing services. Since these services did not involve agricultural produce and were exempted from service tax under Section 65 (105) zza) of the Finance Act, 1994, the appellant was not liable to pay service tax. Consequently, the tribunal set aside the impugned order and allowed the appeals with consequential relief.

In conclusion, the tribunal ruled in favor of the appellant, setting aside the impugned orders and allowing the appeals with consequential relief. The judgment emphasized that the appellant's activities were correctly classified under storage and warehousing services, exempting them from service tax liability.