2019 (9) TMI 1376 - AT - Service Tax

Classification of services - Renting of immovable property service or storage and warehousing services - letting out godowns for storage purpose - demand along with interest and penalty- HELD THAT - Reliance placed in the appellant own case PUNJAB STATE WAREHOUSING CORPORATION VERSUS CCE CHANDIGARH 2018 (2) TMI 154 - CESTAT CHANDIGARH where it was held that the appellants are engaged in the activity of providing of space for storage and warehousing as well as keeping the records thereof and providing insurance security service. As the appellant is providing various other services apart from the space for storage therefore the services appropriately fall under the category of Storage and Warehousing Services. Further 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 Finance Act 1994. Thus the appellant is not liable to pay service tax under the category of Renting of Immovable Property Service or under the category of Storage and Warehousing Service . As the same are exempted as per Clause (d) of Section 66D (Negative list of services) of the Finance Act 1994 relevant for the period w.e.f. 01.07.2012 wherein the services relating to agriculture or agricultural produce by way of renting of leasing of vacant land with incidental its use is exempted from payment of service tax therefore the appellant are not liable to pay service tax. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against demand of service tax under 'Renting of Immovable Property Service' for letting out godowns for storage purpose.

Analysis:
The appellant, an undertaking of the Government of Punjab, appealed against the demand of service tax under 'Renting of Immovable Property Service' for letting out warehouses to the Food Corporation of India. The department alleged that this activity attracted service tax under the Finance Act, 1994. The appellant contended that the activity fell under storage and warehousing, not renting of immovable property. The impugned order demanded service tax, interest, and penalty. The appellant argued that a previous Tribunal order had dropped a similar demand, stating the service was used for storage of food grains.

The Tribunal examined the terms of agreement between the appellant and FCI, which focused on providing space for storage, record-keeping, insurance, and security services. The Tribunal noted that the services provided by the appellant fell under storage and warehousing, exempt from service tax under Section 65 (105) zza) of the Finance Act, 1994. The Tribunal cited Clause (d) of Section 66D, the negative list of services, which exempted services related to agriculture or agricultural produce, including renting or leasing of vacant land. Consequently, the Tribunal set aside the impugned order, ruling in favor of the appellant.

In conclusion, the Tribunal found that the appellant's services qualified as storage and warehousing, exempt from service tax under relevant provisions of the Finance Act, 1994. The appellant was not liable to pay service tax under the categories of 'Renting of Immovable Property Service' or 'Storage and Warehousing Service.' The impugned order was set aside, and the appeal was allowed with any consequential relief.