2026-VIL-498-PAT-ST
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SERVICE TAX High Court Cases

Service Tax – Supply of crude oil from Refinery through pipeline - Crude oil transportation chain involving pipeline, storage, and further transportation - Taxability of Terminal Facilities/Warehousing - Whether terminal facilities / warehousing services are incidental to pipeline service or independent service liable to service tax – HELD - The terminal facilities/warehousing services provided by the respondent-refinery are not incidental or integral to the pipeline service, but constitute an independent service liable to service tax - Without having any storage or warehousing facilities, crude oil not be transhipped from pipeline to other mode of transport. Therefore, the terminal facilities or discharge facilities is nothing but store and warehousing of the crude oil before entering into third step of transportation for final destination of supply of crude oil - As per the MoU, the respondent charged separately for the "discharge facility" or "terminal facilities" or "storing of crude oil" before the next phase of transportation, which cannot be considered as an integral part of the pipeline transportation. The definition of "storage and warehousing" under the Finance Act, 1994 and the legal precedents establish that the storage of crude oil at refinery before further transportation to the final destination is a distinct service and not merely incidental to the pipeline service. The respondent is liable to pay service tax on the terminal facilities/warehousing services provided to the recipient - The appeal filed by the Department is allowed, and the order of the CESTAT is set aside, restoring the order of the Commissioner - Maintainability of Department’s appeal - Pecuniary jurisdiction – HELD – The present appeal has been filed for total tax evasion of less than 1 Crore, which is not a permissible limit for adjudication in terms of Notifications dated 22.08.2019 and 06.08.2024 before this Court – However, on the certain material factual aspects, appellate Tribunal failed to touch core issue and, thus, the Court is convinced enough that the substantial questions of law is involved in the matter, as the finding of the Tribunal is directly and substantially affecting the right of the appellant/department - The present appeal is maintainable before this Court, as the substantial questions of law appears involved irrespective of the financial limitations.
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GSTAT Appeal filed wrongly...
By CA Vivek Jalan

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