M/S Gujarat State Fertilizers & vs Commissioners Of Central Excise, ...

Customs Excise and Service Tax Appellate Tribunal4 February 2015

CitationAppeal No. : ST/13303,10589/2013

Ratio decidendi

The rule this decision rests on

Where a service provider stores liquid or gaseous goods for another and receives consideration for doing so, the activity falls within the taxable service of "storage and warehousing" under Section 65(105)(zza) of the Finance Act 1994, and the mere characterisation of the arrangement as sharing of common expenses does not take it outside that definition. Demand of service tax under the storage and warehousing head cannot be invoked for the extended period of limitation where there is no material establishing suppression of facts with intent to evade payment of tax, and the assessee's bona fide entry into an expense-sharing arrangement with no gain to itself negates such intent. Penalty under Section 78 of the Finance Act 1994 is not sustainable where the extended period of limitation is not available and there is no suppression with intent to evade tax.

Written by Miss Lucy from the judgment below, not taken from a headnote.

Judgment

As delivered

CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,West Zonal Bench, Ahmedabad*****Appeal No. : ST/13303,10589/2013(Appln No. ST/MA(EXTN)/14917/2014)

[ Arising out of OIA-VAD-EXCUS-001-APP-326/2013-14 dtd 26.8.2013, And OIA-SRP/499/VDR-I/2013 dtd 27.2.2013 Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-I ( Appeal) ]

M/s Gujarat State Fertilizers & Chemicals Ltd Appellant(s)

Commissioners of Central Excise, Customs and Service Tax-VADODARA-I( Appeal) Respondent (s)

Represented by :

For Assessee : Shri W Christian (Adv.) For Respondents : Shri Alok Srivastava (AR)

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. R.K. Singh, Honble Member (Technical)

Date of Hearing / Decision : 4/2/2015

ORDER No. A/10193-10194 / 2015 dtd 4/2/2015

Per : Mr.P.K. Das,

Common issue is involved in these appeals and therefore both are taken up together for disposal.

2. The relevant facts of the case, in brief, are that the appellant is engaged in the manufacture of ACH (Acetone Cyanohydrins), MMA, MAA (Mythacrylic Acid) classifiable under Chapter 29 of the Schedule to the Central Excise Tariff Act 1985. The appellant received HCN (Hydro Cynic Acid) from M/s Reliance Industries Ltd (formerly IPCL) through pipe line and partially utilised in their factory for manufacturing of their final product. The balance quantity of 40% were supplied to M/s Gujarat Alkali and Chemicals Ltd (GACL) adjacent to their factory. The appellant received consideration for supply the HCN from M/s GACL known as incineration charges . Show Cause Notices were issued proposing demand of Service Tax alongwith interest and penalty under the category of Storage and Warehousing Services.

3. The Adjudicating Authority confirmed the demand of Service Tax alongwith interest and imposed penalties under various Sections, including Section 78 of the Finance Act 1994 Commissioner (Appeals) upheld the Adjudication Order.

4. The Learned Advocate on behalf of the appellant submits that there is no storage or warehousing facility at their premises. It is a continuous process for supply of gas to the other companies. It is contended that M/s Reliance Industries Ltd supplied the gas to the other companies. There is no relation of service provider and service receiver between the appellant and M/s GACL He submits that this fact was not examined by the lower authorities.

5. On the other hand, the Ld Authorised Representative for the Revenue reiterated the findings of the Commissioner (Appeals). He submits that appellants admitted the storage and supply of gas to M/s GACL. He drew the attention of the Bench to the relevant portion of the adjudication order. Learned Advocate also submits that the extended period of limitation cannot be invoked and imposition of penalties are not warranted as there was no suppression of facts with intent to evade payment of tax.

6. After hearing both the sides and perusal of records, we find force in the submission of the Learned Authorised Representative for the Revenue. We find from the letter dtd 7.11.2011 of the Manager of the appellant company addressed to the Deputy Commissioner, Service Tax, that on account of situational problem and commercial experience the appellant company are sharing the common expenses incurred for usage of storage tank to store HCN received from M/s RIL and other expenses. Storage and Warehousing Service defined under Section 65(102) of Finance Act 1994 means Storage and Warehousing includes storage and Warehousing Services for goods including liquids and gases but does not include any service provided for storage of agricultural produce or any service provided by a cold storage. The taxable service of Storage and Warehousing Service under Section 65(105)(zza) of Finance Act 1994 means any service provided or to be provided to any person, by storage or in relation to storage and warehousing of goods. It is evident from the definition that the Service Tax is leviable on Storage and Warehousing Service for goods including liquids and gases.

7. The Learned Advocate had argued that the RIL supplied HCN in a continuous process, which in turn was transferred to GACL. It is contended that there is no storage of HCN at their premises. It is further contended that the appellant have not taken any charge for rendering the service, which is merely sharing of expenses. We have not impressed with the submission of the Ld Advocate on the ground that it is evident from the appellants own letter that the appellants were storing HCN which were supplied to GACL. It is who noticed that the appellant collected the consideration known as incineration charges from M/s GACL. So, the activities rendered by the appellant would come within the definition of Storage and Warehousing Services and the demand of service tax is sustainable.

8. However, we find force in the submission of the Learned Advocate on the demand of Service Tax for the extended period is to be set aside. The Learned Authorised Representative submits that the appellant had not filed any return. We do not find any material in respect of suppression of fact with intent to evade payment of tax. It is contended by the Learned Advocate that the appellant is a State Government undertaking and entered into agreement for sharing the common expenses with M/s GACL. There is no gain on the part of the appellant. In our considered view, the demand of tax for the extended period of limitation cannot be sustained. Similarly, imposition of penalty under Section 78 is not warranted.

9. In view of the above discussions, we modify the impugned order in so far as the demand of service tax for the extended period and imposition of penalty under Section 78 are set aside. The appeals filed by the appellant is disposed of in the above terms. Miscellaneous applications filed for extension of stay order are also disposed of.

(Dictated and pronounced in the Court)

(R.K. Singh) (P.K. Das) Member (Technical) Member (Judicial)

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