LexM/S GUJARAT STATE FERTILIZERS & CHEMICALS LTD.&ANR. versus COMMISSIONER OF CENTRAL EXCISE
Open in Lexace · Ask the AI about this caseJudgment (excerpt)
[2016] l I S.C.R. 755
M/S GUJARAT STATE FERTILIZERS & CHEMICALS
A
LTD.&ANR.
v.
COMMISSIONER OF CENTRAL EXCISE
(Civil Appeal Nos. 4066-4067 of 2015)
NOVEMBER 22, 2016
[A. K. SIKRIAND ABHAY MANOHAR SAPRE, JJ.]
Finance Act, 1994: ss.65(105)(zza), 65(102) - Two PSUs --
GSFC and GA CL-Both the companies receiving Hydro Cynic Acid
(HCN) ji-om RIL through common pipeline and utilising the same in
their respective factories and sharing the incineration charges -
Allegation that GSFC was collecting 'incineration charges' from
GACL and the said amount charged by GSFCjimn GACL amounted
to providing 'storage and warehousing services' falling under
s.65(105){zza)-Held: To enable GACL to receive this HCN through
common pipeline, arrangement/agreement was entered into between
these two companies - For this purpose, handling facilities were
installed in the premises of GSFC - Howeve1; for installation of
these facilities both "he parties had contributed towards the
investment- Since the said handling facilities were in the premises
of GSFC, incineration is also taking place at the said premises -
Handling facilities expenditure thereof is shared equally by both
the parties - Once these facts are accepted, handling portion and
maintenance including incineration facilities is in the nature ofjoint
venture between two of them and the parties have simply agreed to
share the expenditure - The payment which is made by GACL to
.GSFC is the share of GACL which is payable to GSFC - Thus, it
cannot be treated as common 'service 'provided by GSFC to GACL
for which it is charging GACL- Since there is no element of service
provided by GSFC, the question of service tax would not arise -
Demand of 'service tax' made by the respondent is unwarranted
Allowing the appeals, the Court
HELD: In order to levy service tax pertaining to 'Storage
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SUPREME COURT REPORTS
f2016l 1 l S.C.R.
and Warehousing' of goods, two conditions are required to be
satisfied: The goods in question have to come within four corners
of the definition of 'Storage and Warehousing' contained in Sub-
Section 102 of Section 65 of the Finance Act, 1994; and there has
to be an element of service provided by one person to the other
for which charges for providing such services are collected. There
is no dispute about the manner in which HCN is received through
pipeline from Mis. Reliance Industries Ltd. by GSFC and GACL
and then shared in the ratio of60:40 respectively. GSFC and GACL
are public sector undertakings. Since HCN is to be received
through pipeline, it is abundantly clear that in order to save the
expenditure, both the parties agreed that there should be a
common pipeline. Once HCN is received through the said
common pipeline, it comes first to GSFC's premises and from
there it is diverted in the ratio of 60:40, meaning thereby that
GSFC receives 60% of the IICN whereas GACL receives 40%
of the supply in accordance with their respective requirement.
To enable GACL to receive this HCN through common pipeline,
arrangement/agreement was entered into between these two
parties. For this purpose, handling facilities were installed in the
premises of GSFC. However, fact remains, for which there is no
dispute, that for installation of these facilities both the parties
had contributed towards the investment. Since the said handling
facilities are in the premises of GSFC, incineration also takes
place at the said premises. Handling facilities expenditure thereof
is shared equally by both the parties. That is clearly provided in
the agreement/arrangement that was agreed to between the
parties and is reflected in the Minutes dated 06.07.1980. Once
these facts are accepted, handling portion and maintenance
including incineration facilities is in the nature of joint venture
between two of them and the parties have simply agreed to share
G the expenditure. The payment which is made by GACL to GSFC
is the share of GACL which is payable to GSFC. By no stretch of
imagination, it can be treated as common 'service' provided by
GSFC to GACL for which it is charging GACL. The second
ingredient has not been established in the present case and the
H
MIS GUJARAT STATE FERTILIZERS & CHEMICALS
757
LTD. v. COMMISSIONER OF CENTRAL EXCISE
question of service tax does not arise. In view thereof, it is not
A
necessary to go into the question as to whether receiving ofHCN
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