2019 (1) TMI 441 - AT - Service Tax

Demand of service tax - Auction Income - whether chargeable to tax under Storage and Warehousing Service or not? - Held that - Admittedly, Auction Income is nowhere defined under the statute and at the most what could have been sought to be taxed, instead of the so- called Auction Income, is the service element relating to the services of Storage and Warehousing, if any. Hon ble Mumbai Bench of the CESTAT has decided identical issue in COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX, RAIGAD VERSUS M/S. BALMER LAWRIE AND CO LTD. 2015 (11) TMI 902 - CESTAT MUMBAI , where it was held that Merely for the reason that Section 150 provides for distribution of the amount of proceed of auction that will not empowered the government to recover service tax on the auction proceeds - demand do not sustain - appeal dismissed - decided against Revenue.

Summary

Issues:
Taxability of auction income under Storage and Warehousing Service

Analysis:
The case involved the taxability of "Auction Income" derived from the auction proceeds of abandoned cargo by importers under Storage and Warehousing Service. The adjudicating authority held the auction income chargeable to service tax, considering it as payment for storage and warehousing charges due from the importer. However, the first appellate authority overturned this decision, stating that service tax is not applicable when the service provider and recipient are absent. The appellate authority also referenced a Board Circular and concluded that the auction should be treated as a sale rather than a service, thereby exempting it from service tax.

During the hearing, the Revenue argued that the services of Storage and Warehousing are rendered when imported goods are not immediately cleared by importers at the Container Freight Station (CFS). They contended that the auction proceeds should primarily go towards Customs Duties before being retained by the custodian of the goods. On the contrary, the consultant for the respondent supported the appellate authority's findings.

The Tribunal analyzed the case, noting that the Revenue did not allege unjust enrichment and that "Auction Income" was not defined under the statute. They emphasized that instead of taxing the auction income, the service element related to Storage and Warehousing should have been considered. Referring to previous judgments, the Tribunal highlighted that for service tax to apply, there must be a taxable service provided to a recipient with consideration received. They cited detailed findings from a Mumbai Bench case, which clarified that auction proceeds of abandoned goods do not involve a service recipient, making service tax inapplicable. The Tribunal upheld the appellate authority's decision, dismissing the Revenue's appeal based on the Mumbai Bench's precedent and the absence of a taxable service in the auction transactions.

In conclusion, the Tribunal found the demand for service tax on the auction income unsustainable, aligning with the Mumbai Bench's interpretation and dismissing the Revenue's appeal accordingly.