By TIOL News Service

MUMBAI, DEC 18, 2014: THE appellant is engaged in the manufacture and sale of liquid oxygen, nitrogen, argon etc. which is to be stored at a temperature of Minus (-)269 0 C. As the customers who are using these gases are not having the storage facilities, the appellant is providing such storage tanks.

The appellant is charging rent for usage of the storage tank & is also maintaining these storage tanks i.e. wear and tear of these tanks is monitored by the appellant. The appellant is paying Central Excise duty as well as VAT on the rent portion charged from the customers.

Revenue is of the view that the rent charged by the appellant for leasing out the storage tanks to their customers fell under the category of ‘Storage and Warehousing Services' as per Section 65(102) of the FA, 1994.Proceedings were initiated and demands were confirmed.

In one of the applications filed for stay, the CESTAT observed -

"4. Considering the submissions made by both the sides, we find in this case, that the storage tanks have been leased out by the applicant to their customers for storage of gases. Prima facie, we are of the view that the leasing out of the storage tanks does not fall under the category of 'Storage and Warehousing Services'. Therefore, the applicant has made out a case for 100% waiver of pre-deposit. Accordingly, we waive the requirement of pre-deposit of the service tax, interest and penalties and stay recovery thereof during the pendency of the appeal."

We reported this as 2012-TIOL-1077-CESTAT-MUM.

A similar stay was granted in another matter of the same appellant relying upon the aforesaid decision. See 2013-TIOL-1858-CESTAT-MUM.

The period involved is 16.8.2002 till March 2012.

The appeals were heard recently.

The appellant submitted that they were merely renting the storage tank and they were not a storage and warehouse keeper and the control of the goods in storage tank is with the buyer only. Furthermore, as per the taxability under Section 65(105) of the Finance Act, 1994, the appellant should provide storage and warehousing facility to their customer and the essential test is that they should provide the security of goods, tracking, loading and unloading of the goods in storage area. Inasmuch as the goods are not in their control, they are not maintaining any inventory of the said goods therefore they are not liable to pay service tax under the category of ‘Storage and Warehousing Services'. It is further submitted that as the appellant has taken into consideration the rent charge on storage tank in the assessable value of the excisable goods, therefore, double levy of duty cannot be imposed on them. Support is also taken of the decision in Indian Oil Corporation Ltd. vs. Commissioner of Central Excise, Goa - 2014-TIOL-729-CESTAT-MUM.

The AR submitted that since the appellant is responsible for wear and tear of the storage tank and they have insured the storage tank, therefore, storage tank is in control of the appellant; hence the demand has been correctly raised under the category of Storage and Warehousing Services.

The Bench observed -

"6. In this case to decide the taxability of service, the real test is that, when the goods have been passed on to the customer. From the facts of the case, it is emerging that the gas in the storage tank installed at the place of buyer and the goods transferred to the buyer. Therefore, there is no control of the appellant on the goods in storage tank, after gas is stored in the tank the whole responsibility of the goods is with the buyer only. In these circumstances, as the appellant is not having any control over the goods and they are not responsible for the security of the goods, the appellant is not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994."

The orders were set aside and the appeals were allowed with consequential relief.

(See 2014-TIOL-2556-CESTAT-MUM)