2015 (10) TMI 2655 - AT - Service Tax

Service charges - Auction of warehoused goods - whether proceed of auction of warehoused imported goods, in case of importer abandoned the goods, shall be considered as service charges towards storage or warehouse and is liable for service tax? - Held that - Board vide instruction F.No. B11/1/2002-TRU dated 1/8/2002 has clarified that no cargo handling service can be said to have been rendered in case of abandoned cargo, therefore, service tax is not leviable - Since cargo handling is precursor to the warehousing, the Circular can be logically applied to he warehousing of abandoned cargo also and the said clarification can be applied to the instant case since no warehousing service can be said to have been rendered. The auction charges adjusted towards warehousing charges cannot be considered as receipt of any services and hence not liable to demand of service tax. Appeal dismissed - decided against Revenue.

Summary

Issues involved:
Whether proceeds of auction of warehoused imported goods, in case of importer abandoned the goods, shall be considered as service charges towards storage or warehouse and is liable for service tax.

Analysis:
In this case, the main issue is whether the proceeds of the auction of abandoned imported goods should be considered as service charges towards storage or warehouse, making it liable for service tax. The Revenue argued that as per Section 150 of the Customs Act, 1962, the proceeds from the auction should be considered as payment towards storage and warehouse charges, thus subject to service tax. On the other hand, the respondent contended that since there is no service recipient involved in the transaction, the sale proceeds from the auction should not be liable to service tax. The respondent further relied on Board instructions to support their argument that no service tax is leviable in the case of abandoned cargo.

The Tribunal carefully considered the arguments presented by both sides. It was noted that in this transaction, there was no service recipient, which is a fundamental requirement for service tax liability. The Tribunal emphasized that the mere provision in Section 150 for the distribution of auction proceeds does not automatically make it subject to service tax. The Commissioner (Appeals) had thoroughly analyzed the facts and legal provisions, including Sections 48 and 150 of the Customs Act, 1962, as well as service tax regulations. The Commissioner's findings highlighted that the auction proceeds were not related to any service provided but were part of the sale of goods, with the title passing to the successful bidder.

The Commissioner's order detailed how the statutory requirements under the Customs Act dictate the distribution of auction proceeds, emphasizing that these provisions do not pertain to services rendered. Additionally, references were made to relevant notifications and circulars exempting certain transactions from service tax if they are treated as sales of goods. The Commissioner also relied on previous tribunal decisions and Board clarifications to support the conclusion that auction charges adjusted towards warehousing charges should not be considered as receipts for services and are not liable for service tax.

Based on the detailed analysis and findings of the Commissioner (Appeals), the Tribunal found no errors in the order and upheld it, dismissing the Revenue's appeal. The Tribunal concluded that the auction charges adjusted towards warehousing charges do not constitute receipts for services and are not subject to service tax.