Order Date – 11 August 2023

Parties: M/s. Shree Shubham Logistics Ltd., M/s. Rajasthan State Warehousing, The Principal Commissioner, CGST & Central Excise Commissionerate, Jaipur Vs Commissioner of Central Excise, Jodhpur, Commissioner of CGST & Central Excise, Jaipur

Facts – 

• The Appellant, M/s. Shree Shubham Logistics had entered into a Memorandum of Understanding dated 05.03.2010 with Rajasthan State Warehousing Corporation to jointly work towards development of an efficient warehousing system.
• A show cause notice was issued to Shubham Logistics alleging at the consideration received from Rajasthan State Warehousing Corporation to Shubham Logistics would be taxable under the category of “business support service‟. Further the warehousing income received by Shubham Logistics from NCMSL would actually be “rental” income taxable under the category of „renting of immovable property‟. 
• A Show cause notice was also issued to Rajasthan State Warehousing Corporation proposing demand of service tax on „intellectual property services‟ defined under section 65(55b) of the Finance Act as also “support services of business or commerce‟ provided to Shubham Logistics.

Issue – 

• Whether the appellant is liable to discharge service tax on “business support service‟?

Order – 

• The Tribunal observed that it would be clear that they had agreed to jointly work towards development of an efficient warehousing system and had not provided support service related to business and commerce prior to 01.07.2012 to each other. Warehousing of agricultural produce service was exempted from service tax prior to 01.07.2012 and even for the period post 01.07.2012 the same continued to be exempted since they were covered under the negative list.
• In the case of Ruchi Infrastructure, the Division Bench of the Tribunal has observed that “A plain reading of the arrangement between the Appellant and MPWLC as narrated in the Show Cause Notice as well as in the impugned order clearly shows that it was a joint venture with an income sharing arrangement. In such a relationship there is neither a service provider nor a service recipient but only partners in business. We also find no evidence that there was any renting of the warehouses by the Appellant to MPWLC was for use in the course of or furtherance of business or commerce.”
• Further it is more than apparent from the terms of the Memorandum of Understanding dated 05.03.2010 entered into between Shubham Logistics and Rajasthan State Warehousing Corporation that a revenue sharing arrangement came into existence between Shubham Logistics and Rajasthan State Warehousing Corporation and it would not be leviable to service tax.
• When the order dated 28.06.2019 passed by the Commissioner (Appeals) has attained finality and it has also been followed by the Commissioner (Appeals) in the subsequent order dated 15.02.2021, it would not be open the department to urge in the present appeals that revenue sharing arrangement had not been arrived at in terms of the Memorandum of Understanding. Such being the position, service tax could not have been levied upon the appellant.
• The orders are, accordingly, set aside and the appeals are allowed. Appeal filed by the department is dismissed.