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TMI Blog2007 (8) TMI 822X X X X Extracts X X X X X X X X Extracts X X X X ..... es of the storage of goods which are taxable under the category of storage and warehousing services in terms of the Finance Act, 1994. Therefore, the Revenue proceeded against the appellant proposing demand of the service tax and also the penal provisions. The adjudicating authority passed the impugned order. He confirmed an amount of Rs. 65,47,829 being the service tax payable by the appellants on the total value of the taxable service rendered by them for the period from July, 2003 to March, 2005 under Section 73 of the Finance Act, 1994. Interest under Section 75 was also imposed. Penalty at the rate of Rs. 200 per day was imposed under Section 76 of the Finance Act. Penalty of Rs. 1,000 was imposed under Section 77 of the Act. The ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding appropriate licences from the Karnataka State Government. It is seen from the agreement that the appellants actually purchase liquor and then later, they are sold. This is very clear from the agreement entered by the appellant with the distilleries. However, if the liquor sold is not lifted within 90 days, the appellant-Corporation charges a demurrage fee of Rs. 2 per day from the manufacturer. It is not very clear as to why this fee is charged from the manufacturers because once the liquor is purchased by the Corporation, we do not understand how it is the manufacturer's responsibility to sell them in time. Anyhow, we do not want to comment anything on this aspect in the absence of the proper record. However, it is a fact that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is that they, actually, are in the business of purchasing and selling liquor. Therefore, the appellants actually hired the storage base from various corporations like KSWHC, CWC, certain private godowns, etc., in order to store the liquor purchased by them. It cannot be said that the appellants render storage services to themselves. The appellants purchase liquor. They have to be stored. In order to store them, they hire various storage bases and they incur expenditure in connection with the storage. In these circumstances, it is their contention that it cannot be said that they are rendering services to themselves. 6. Another point argued by the learned Advocates is that merely because of the fact that in their profit and loss accounts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also seen that the adjudicating authority has recorded the following findings: Though the assessee provides insurance cover, security arrangement and bears the electricity charges and rent in respect of the godowns, no amount is charged from the recipient of service. The expenditure on those accounts are borne by the assessee out of the profit margin earned on the sale of liquor. Since the value of taxable service shall be the gross amount charged by the service provider and in the present case, only storage fee was realised from the recipient of service, the storage fee alone shall be taken into consideration for the purpose of determination of service tax liability. 8. It is very clear that the appellants incur expenditure for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te argued that the amount collected towards demurrage cannot be termed as storage charges for purposes of levy of the service tax. 11. On a very careful consideration of the entire issue, we find that the appellant-corporation has been established for the distribution of liquor within the State of Karnataka by purchase and sale of liquor from the various manufacturers and distilleries. Since the liquor is purchased by them, the same has to be stored also. Therefore, the appellants incur various expenditure towards the storage of the liquor. Only when the liquor is not lifted within 90 days, the demurrage charges are levied from the supplier Strictly speaking, we cannot consider this as a charge collected for storage of the goods because ..... X X X X Extracts X X X X X X X X Extracts X X X X
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