2016 (10) TMI 122 - HC - Service Tax

Auction of an aircraft - protection of bidder - the bid amount falls short of the reserve price to the extent of 81.8% - limitation of 30 days - the Commissioner of Service Tax as also the Board of Excise and Customs have not given their approval to the sale - Held that - In this case, the bid was dated 18th August, 2016. The validity of the same has expired on 18th September, 2016. The bid is, therefore, no longer valid on the option having been exercised in terms of this clause. These statements, made on instructions, are accepted as undertakings given to this court.

Summary

Issues:
1) Approval for bid not granted by Commissioner of Service Tax and Board of Excise and Customs
2) Bid amount falls short of reserve price by 81.8%
3) Bidder withdraws bid citing expiration of validity period
4) Protection of rights for respondent no. 3 in auction process

Analysis:
1) The judgment pertains to a Notice of Motion (L) No. 639 of 2016 where the Commissioner of Service Tax and the Board of Central Excise and Customs did not grant approval for a bid placed by M/s. SGI Commex Limited. The Additional Solicitor General of India represented the Commissioner and informed the court about the lack of approval despite repeated follow-ups. The court was urged to pass appropriate orders in accordance with the law.

2) During the hearing, it was revealed that the bid amount by M/s. SGI Commex Limited fell short of the reserve price by 81.8%. Additionally, both the Commissioner of Service Tax and the Board of Excise and Customs had not approved the sale. The bidder decided to withdraw from the bid, citing the expiration of the bid's validity period as per the special terms and conditions of the sale.

3) The bidder's counsel informed the court that the bid validity, which was for 30 working days, had expired on 18th September 2016, rendering the bid invalid. The bidder exercised its option to withdraw as per clause 7 of the special terms and conditions. The court accepted these statements as undertakings given during the proceedings.

4) Respondent no. 3 sought to protect its rights in the auction process by proposing to provide details of an independent third party or agency with expertise in conducting transparent sales or auctions of aircraft. The court granted one week for respondent no. 3 to revert on this aspect and scheduled the matter for further proceedings on 6th October 2016, without allowing any further adjournments. The judgment clarified that it would be the bidder's responsibility to enforce any rights for the recovery of sums paid, and all parties involved would have the opportunity to defend against such actions or proceedings.