2023 (9) TMI 456 - AT - Service Tax

Classification of services - Auctioneering services or not - conducting sale of goods by tender - HELD THAT - The issue stand decided in the case M/S. THE SALEM STARCH SAGO MANUFACTURERS SERVICE INDUSTRIAL CO-OPERATIVE SOCIETY LTD. VERSUS CCE ST, SALEM 2018 (3) TMI 192 - CESTAT CHENNAI , where the Tribunal observed while both sale by tender and sale by auction may have a common intendment of selling the goods, the modalities and the processes involved in each are very different and the impugned activities will be leviable to service tax under the scope of Auctioneer Service, cannot sustain. The demand cannot sustain and requires to be set aside - appeal allowed.

Summary

Issues involved:
The issue involves determining whether the appellant's activity of conducting sale of goods by tender constitutes Auctioneer services u/s 65(105)(zzzr) of the Finance Act, 1994, leading to a demand for Service Tax, interest, and penalties for a specified period.

Comprehensive Details:

Issue 1 - Nature of Activity:
The Ld. Consultant argued that the appellant's activity does not fall within the definition of Auctioneer services as per Section 65(105)(zzzr) of the Finance Act, 1994. The appellant acts as an intermediary between agriculturists and traders/buyers, facilitating the sale of agricultural produce like Turmeric. The process involves displaying the produce, allowing traders to quote prices, and finalizing sales only with the agriculturist's consent. The Ld. Consultant emphasized that the process is akin to a tender, not an auction, as the society charges a fixed commission only upon completion of the sale. Previous decisions by the CESTAT Chennai also support the appellant's claim.

Issue 2 - Legal Precedents:
The Ld. Consultant cited the Tribunal's decisions in similar cases like M/s. Starch Starch and Sago Manufacturing Service Industrial Cooperative Society Ltd. and M/s. Attur Agricultural Producers Cooperative Marketing Society Ltd., where it was held that activities resembling tender processes do not fall under the definition of Auctioneer services. The Ld. Consultant prayed for the appeal to be allowed based on these precedents.

Issue 3 - Tribunal's Decision:
After hearing both sides, the Tribunal considered the nature of the appellant's activity and the legal interpretations provided. Referring to the definitions of "tender" and "auction," the Tribunal found merit in the appellant's contentions. It distinguished between the live, transparent process of an auction and the single-bid process of a tender. The Tribunal concluded that the appellant's activity aligns more with a tender process than an auction, as evidenced by the lack of real-time bidding and the absence of multiple bids. Relying on the legal analysis and precedents, the Tribunal set aside the demand for Service Tax, interest, and penalties, allowing the appeal with consequential relief.

This summary provides a detailed breakdown of the issues involved in the legal judgment, highlighting the arguments presented, legal precedents cited, and the Tribunal's decision based on the nature of the appellant's activity and relevant legal interpretations.