By TIOL News Service

MUMBAI, MAY 08, 2014: THE appellants are having Petroleum Products Outlets which are owned by them but the same are leased out to their dealers for sale of their petroleum products. In these outlets they have facilities to store the petroleum products, namely petrol, diesel etc. and also various equipments such as dispenser for selling the same. Appellants charged monthly license fee from the dealer for utilizing the said facilities.

Revenue issued a Show Cause Notice on the ground that the facility includes storage and warehousing and, therefore, the appellants are liable to pay service tax under the taxable service of storage and warehousing.

Since the demands were confirmed by the lower authorities, the oil company filed an application for stay before the CESTAT.

The Bench had while granting a stay in the matter observed –

6. On perusal of the agreement produced before us and going through the records, we find that the amount collected by the applicant seems to be fees charges as licence fee. Though the facts are not very clear as to whether the licence fee is for operating the petrol pump or otherwise, still we find that the issue may be covered by the decision of Tribunal in the case of Finolex Industries Ltd (2007-TIOL-790-CESTAT-MUM). As such, we are of the considered view that the applicant has made out a prima facie case for waiver of amount of Service Tax and the penalties involved. Accordingly, the application for waiver of pre-deposit of Service Tax and penalties is allowed and recovery thereof stayed till disposal of the appeal.

We had reported the order as 2008-TIOL-1766-CESTAT-MUM.

The appeal was heard recently.

The appellant submitted –

+ They are not providing any storage and warehousing but they are providing various equipments alongwith land on lease basis.

+ They are not controlling the storage of petroleum products. It is the dealer who is purchasing the products from them and storing the same in the said tanks and selling the same from the outsets.

+ In view of this position it cannot be said that the appellants are providing any storage or warehousing service. At the most, it can be said that they are providing services relating to renting of tangible goods.

+ From 2008 onwards they are paying service tax under the category of supply of tangible goods service.

The A.R. reiterated the order of the lower authority. It was also submitted that equipment(s) are in the name of the appellant;even the licenses are in the name of the appellant and if any of the equipment requires any repair the same are carried out by the appellant and under these circumstances it is to be held that appellants are providing the storage and warehousing services.

The Bench extracted the definition of ‘Storage & Warehousing Service' and observed –

"6. From the facts mentioned earlier it would be clear all the operations of the outlets are under the control of the dealers and not of the appellant. It is not as if the dealers bring their goods to the appellant for storing or warehousing and thereafter clear the goods so stored. Appellant only owns and leases facilities to the dealers for their use. Keeping in view the nature of transaction the service provided cannot be considered as storage and warehousing service provided by the appellant and we accordingly hold so."

The appeal was allowed.

(See 2014-TIOL-729-CESTAT-MUM)