2015 (8) TMI 906 - HC - Service Tax

Condonation of delay - delay due to election of the co-operative society challenged before courts - Held that - Appellants in support of the applications for condonation of delay would show that the delay had in fact been properly explained with genuine reasons. It is common knowledge that elections to cooperative societies become a huge and acrimonious affair in the State of Tamil Nadu. Every time elections are held, the elections become the subject matter of challenge before courts and eventually, special officers get appointed in many cases. - Therefore, the cause of the cooperative societies actually becomes nobody s child. In such circumstances, the Tribunal ought to have taken a pragmatic view. The appellants also appear to have a good case on merits. The auction conducted by them of the agricultural produce, harvested by their own members, may not really be a service rendered by them. These societies are established for the purpose of enabling the farmers to market their agricultural produce in such a manner that the farmers are not exploited by middle men. - Eventually, any levy made upon these societies will offset the benefit that is sought to be conferred upon the farmers by legislation. Therefore, the Tribunal ought to have taken a practical view in such matters. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Challenging delay in filing statutory appeals before the Customs Excise and Service Tax Appellate Tribunal regarding service tax levied on agricultural producers cooperative marketing societies.

Analysis:

The judgment delivered by V. Ramasubramanian,J concerned three cooperative marketing societies challenging a common order by the Customs Excise and Service Tax Appellate Tribunal, which refused to condone the delay in filing statutory appeals related to service tax. The appellants, agricultural producers cooperative marketing societies established under the Tamil Nadu Cooperative Societies Act, were accused of rendering services as auctioneers of agricultural produce, attracting service tax based on information gathered through Intelligence. Despite opposing show cause notices, Orders in Original were passed levying service tax, leading to the filing of appeals before the Commissioner of Central Excise (Appeals), which were rejected. Subsequently, further appeals were filed before the Tribunal, resulting in delays in each case, leading to applications for condonation of delay, which were rejected by the Tribunal on the grounds of improper explanation of delay. The appellants, aggrieved by this rejection, appealed to the High Court.

Upon reviewing the affidavits filed by the appellants explaining the delay, it was found that the delay was properly explained with genuine reasons. The Court noted that elections to cooperative societies in Tamil Nadu often lead to legal challenges and the appointment of special officers, causing delays and administrative challenges. The Court emphasized that the auction conducted by the societies for the agricultural produce harvested by their members may not constitute a taxable service, given the societies' role in enabling farmers to market their produce without exploitation by middlemen. The Court highlighted the importance of considering whether services rendered by these societies to their members should attract service tax, as any levy on these societies could offset the legislative benefits intended for farmers.

In light of the above considerations, the High Court allowed the appeals, set aside the Tribunal's order, and remitted the matter back to the Tribunal for disposal within three months. The Court emphasized the need for a practical view in such matters and did not impose any costs on the appellants. As a result, the appeals were allowed, and the related matters were closed.