2018 (11) TMI 1154 - AT - Service Tax

Tribunal rules auctioneering services pre-1.5.2006 not taxable under Business Auxiliary Service

Teaserve Versus Commissioner of Central Excise, Salem

The Tribunal ruled in favor of the appellants, determining that their auctioneering services before 1.5.2006 were not taxable under Business Auxiliary ... Business Auxiliary Service - service of auctioneering - appellants have rendered services in respect of conducting auctions of Tea - period from 10/2003 to 12/2005 - Held that:- The several activities have been averred in the SCN with regard to auction of tea. As per the Tea order 2003, the appellant who is a cooperative society has to do lot of procedures and also comply with the rules and regulations therein as a registered auctioneer. It is seen that predominately their activity as alleged in the SCN would fall within the ‘auctioneering services’ more than that of a broker. The earlier decision of the Tribunal in the case of Forbes & Co. & Others Vs CCE Salem [2018 (1) TMI 1052 - CESTAT CHENNAI] is distinguishable since the auctioneering services have been brought within taxable service w.e.f. 1.5.2006. Demand of service tax do not sustain - appeal allowed - decided in favor of appellant. Issues:Interpretation of service tax liability on auction services rendered by appellants in the period from 10/2003 to 12/2005 under the category of Business Auxiliary Service (BAS).Analysis:The case involved a dispute regarding the service tax liability of the appellants for conducting auctions of Tea from 10/2003 to 12/2005. The department alleged that the activities fell under BAS and issued a show cause notice for service tax demand of Rs. 5,77,826/- along with interest and penalties. The original authority and Commissioner (Appeals) upheld the demand. The appellants contended that their activities were predominantly auctioneering services, not related to the promotion or marketing of goods, and thus not taxable under BAS for the period before 1.5.2006. They argued that their cooperative society aimed to provide quality services to small tea growers and operated under a genuine belief that their activities were not subject to service tax. Reference was made to a Tribunal decision to distinguish their case from that of brokers.The Tribunal considered the definitions of 'Organiser of tea auction' and 'Broker' under the Tea (Marketing) Control Order, 2003. It noted that the appellants' activities primarily consisted of pre-auction work, auction work, and post-auction work related to tea auctioneering. The service of auctioneering was brought under the taxable net only from 1.5.2006. The department argued that the appellants' activities during the disputed period fell under BAS due to their involvement in various auction-related procedures and compliance with regulations. However, the Tribunal found that the appellants' activities aligned more with auctioneering services rather than brokering, as alleged in the show cause notice. Given that auctioneering services became taxable only from 1.5.2006, the demand for service tax on activities before this date was deemed unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed with any consequential benefits as per law.In conclusion, the Tribunal ruled in favor of the appellants, holding that their auctioneering services before 1.5.2006 were not taxable under BAS. The decision highlighted the distinction between auctioneering and brokering activities and emphasized the timing of the inclusion of auctioneering services in the taxable net.