Whether renting of equipments for storing petrol is covered under storage and warehousing services?

PJ/Case Law /2016-17/3425

Case- INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CUS. & C. EX., GOA
Citation-2014 (35) S.T.R. 431 (Tri. - Mumbai)
Brief Facts- Brief facts of the case are that the appellants are having certain 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.
Appellant’s Contention- The main contention of the learned advocate for the appellant is that they are not providing any storage and warehousing but they are providing various equipments along with 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 outlets. 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. The learned counsel also stated that from 2008 onwards they are paying service tax under the category of supply of tangible goods service.
Respondent’s Contention- The learned A.R. reiterated various points mentioned in the impugned order. Also stated that equipments 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
Reasoning Of Judgement-The tribunal have considered the submissions. Section 65(102) of the Finance Act, 1994 defines ‘Storage and Warehousing’ as under :“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”
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 tribunal accordingly held so. In the result the appeal was allowed.
Decision- Appeal allowed.
Comment- The essence of the case is that renting of the petroleum product outlet having facility to store petroleum products and various equipments thereto cannot be considered as provision of storing and warehousing services. The activity was appropriately covered under supply of tangible goods services as what was provided was facilities to store petrol to the dealers with no control of the appellant over the stored goods. Hence, since the risk of storage remained vested with respective dealers, the activity could not be considered as storage and warehousing service.

Prepared By-Arundhati Bajpai

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PJ/Case Law /2016-17/3425

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