2014 (3) TMI 409 - AT - Service Tax

Tribunal Orders Tax Pre-Deposit for Auctioneering Service, Emphasizes Compliance with Finance Act

M/s. Attur Agricultural Producers Co-operative Marketing Society Ltd. and others Versus Commissioner of Central Excise, Salem

The Tribunal determined that the applicants' activities constitute 'Auctioneering Service' under the Finance Act, 1994, directing them to make a ... Waiver of pre-deposit of tax and penalties - Auctioneering Service - Held that:- Board has clarified that the auction by the Tobacco Board would be required to pay tax for auction of the tobacco - Prima facie activities as mentioned in the impugned order would come under the category of Auctioneering Service . In view of that, we direct the applicant to make pre-deposit of tax within eight weeks - Conditional stay granted. Issues:1. Whether the activities of the applicants fall under the category of 'Auctioneering Service' for the purpose of service tax.2. Whether the applicants are liable to make a pre-deposit of tax, penalties, and interest.Analysis:Issue 1: Activities falling under 'Auctioneering Service'The main contention revolves around determining whether the activities of the applicants, who are registered under the Co-operative Societies Act, constitute 'Auctioneering Service' as defined under Section 65(105)(zzzr) of the Finance Act, 1994. The applicants argue that their activities of tendering agricultural produce through a secret tender process do not amount to auctionable services. They emphasize that the process is a marketing assistance to members to obtain fair prices for their produce, not akin to traditional auction practices. The applicants stress that they are providing self-service to members and are not acting as commission agents. The Revenue, on the other hand, argues that the applicants' activities align with conducting auctions, citing specific procedures followed by the applicants that resemble auction practices. The Revenue highlights that the goods involved are movable and tangible, falling under the definition of 'property' for auction purposes. Additionally, a clarification from the Board (CBEC) supports the applicability of service tax to auctions conducted by specific bodies. The Tribunal, after considering arguments from both sides, concludes that the activities of the applicants indeed fall under the category of 'Auctioneering Service' based on the nature of their operations, directing them to make a pre-deposit of tax.Issue 2: Pre-deposit of tax, penalties, and interestRegarding the requirement for a pre-deposit of tax, penalties, and interest, the Tribunal orders the applicants to make specified deposits within a stipulated timeframe. The amounts to be deposited vary for each applicant, with the directive that upon compliance, the balance amount of tax along with penalties and interest would be waived, and recovery thereof stayed during the appeal process. This decision aims to balance the interests of the applicants, particularly highlighting the potential adverse impact on poor farmers if a pre-deposit is not made. The Tribunal sets a deadline for compliance, underscoring the importance of adhering to the directives within the specified timeframe.In conclusion, the Tribunal's judgment addresses the core issues of whether the applicants' activities constitute 'Auctioneering Service' and the corresponding requirement for a pre-deposit of tax, penalties, and interest. The decision underscores the need for compliance with tax regulations while also considering the unique circumstances and implications for the parties involved.