2019 (8) TMI 262 - AT - Service Tax

Classification of service - Auctioneer s Service - Business Support Service - extended period of limitation - HELD THAT - As far as Auctioneers Service is concerned, it can be levied on the service of auctioning. Undisputedly, in the present case, as recorded in the impugned order itself, the appellants are selling goods through tender and NOT through auctions. The Auctioneer s service does not cover the service of tender - demand set aside. Business Support Service - HELD THAT - Evidently, the cooperative society is engaged in the business of lending money to their members and have been collecting some charge towards appraising the value of the pledged jewels in the process. This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members - demand set aside. The demand of interest and penalties also deserve to be set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the Agricultural Marketing Society is liable to pay service tax for "Auctioneer's Service" and "Business Support Service"?
2. Whether penalties imposed under Section 77 and 78 of the Finance Act, 1994 are justified?
3. Whether the late fee for non-filing of ST-3 returns under Section 70 of the Finance Act read with Rule 7C of the Service Tax Rules, 1994 is applicable?

Analysis:
1. The case involved allegations against an Agricultural Marketing Society for not discharging service tax liability for "Auctioneer's Service" and "Business Support Service." The department issued a show cause notice demanding service tax for the period from 1.5.2006 to 31.3.2011. The society contended that they were not auctioning any property but facilitating marketing of agricultural produce through tenders. The Tribunal noted that the society was not providing auction services but facilitating tenders, thus the demands on both counts were found unsustainable. The appeal was allowed, setting aside the demands, interest, and penalties.

2. The Ld. Commissioner had confirmed the demands, imposed penalties under Section 77 and 78 of the Finance Act, 1994, and ordered the collection of late fees. However, the Tribunal found that since the demands themselves were not sustainable, the penalties and late fee were not justified. The impugned order was set aside, and the appeal was allowed with consequential relief as per law.

3. The society argued that they were lending money to their members and collecting charges for appraising the value of pledged jewels, which did not constitute "Business Support Service." They contended that they were not supporting another bank's business but conducting their own lending operations. The Tribunal agreed with this argument, emphasizing that the society was not providing services to others but conducting its own business activities. Consequently, the demands for Business Support Service were deemed unsustainable, leading to the allowance of the appeal with appropriate relief.