LPG stored in ‘bullet’ Storage Facility not Storage and Warehousing Services u/s 65(102) of Finance Act: CESTAT

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that Liquified Petroleum Gas (LPG) stored in ‘bullet’ storage facility not Storage and Warehousing Services under Section 65(102) of the Finance Act, 1994.

The appellant, M/s. Total Energies Marketing India Pvt. Ltd, who is registered with the Service Tax Department are engaged in providing ‘Storage & Warehousing Services’ to various clients. On specific intelligence that the appellants are engaged in the business of integrated LPG services including import, storage, sales, supply, distribution of LPG etc. Further, it was found that the appellants were selling LPG to their customers and to facilitate continuous supply, they had installed storage units called ‘bullets’ in the premises of their customers.

For the period from 1.4.2009 to 31.3.2010, the appellant collected a sum of Rs.10,75,500/- from their customers towards ‘lease rentals’ of these facilities. Show Cause Notice was issued to the appellant proposing to demand service tax of Rs.1,07,550/- on the gross amount received for the above period alleging that the erection, commissioning and maintenance etc. of the facility amounts to providing service under ‘Storing and Warehousing’ service along with other adjudicatory liabilities.

The counsel for the appellant contended that the activity undertaken by the appellant is not classifiable as ‘Storage and Warehousing’ services. The real test is to see who has control over the goods stored inside the storage tank. Since the appellant had no control over the gas stored in the storage tank and the control rested with the customers, it was not ‘storage and warehousing’ services. No interest is leviable and no penalty is imposable as the demand itself merits to be set aside.

The Authorized Representative for the Revenue supported the findings in the impugned order and stated that the definition of storage and warehousing service includes storage and warehousing of liquids and gases. Further, the appellant has supplied, installed, commissioned and undertaken maintenance of the bullets which was designed to store LPG meeting BIS standards.

The Two-Member Bench comprising M Ajit Kumar, Technical Member and P Dinesha, Judicial Member observed that “None of these activities are seen to be provided by the appellant to the customers, further unlike in a warehouse, the goods (LPG) stored in the ‘bullet’ storage facility installed at the customers premises is not under the control of the appellant and the whole responsibility of the stored LPG is with the customer. Hence, they are not covered under the category of Storage and Warehousing Services as defined under Section 65(102) of the Finance Act, 1994.”

To Read the full text of the Order CLICK HERE

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