2021 (3) TMI 218 - AT - Service Tax

Tribunal dismisses service tax demands for Auctioneering & Business Support Services, upholds liability for Goods Transport Agency.

The Tribunal set aside the demands for service tax under Auctioneering Service and Business Support Service, concluding that the activities did not fall ... Business Support Service - Auctioneering services - extended period of limitation - penalty - HELD THAT:- The issue of auctioneering service and business support service, these issue stand covered by the decision of the Tribunal in the case of M/S. ATTUR AGRICULTURAL PRODUCERS VERSUS COMMISSIONER OF CENTRAL EXCISE [2019 (8) TMI 262 - CESTAT CHENNAI] where it was held that As far as the demand with respect to the Auctioneer’s Service is concerned, he would assert that the charge is only on auctioning service and not on tendering service. What they are rendering is facilitation of tenders for sale of the products of their members through sealed tenders. Therefore, the term “auctioneer’s service” does not apply to their activity at all and As far as the demand of service tax under “Business Support Service” is concerned, he submits that they give gold loans against jewels pledged by their members and collect an appraising charge of 3% on the amount of loan sanctioned subject to maximum of ₹ 100/- per loan as per the direction given by their finance bank. Appellants are getting loans from their bank namely M/s.Salem District Central Cooperative Bank, Salem and lending to their members on interest. Therefore, this is a case of they lending money to their members and not supporting service of business of some other bank. The facts analyzed in the above case is similar to the facts of the present appeals - there are no hesitation to apply the decision of this Bench which is rendered in one of the assessee’s own case - the demand under Auctioneering Service and Business Support Service cannot sustain. GTA Services - appellant has argued that during the relevant period when GTA services was introduced (w.e.f 1.1.2005), the understanding was that when individual truck owners are engaged the activity would not fall under definition of GTA - HELD THAT:- There were several litigations on this issue and the Tribunal in the case of NIRAV INDUSTRIES VERSUS COMMR. OF C. EX. & CUS., RAJKOT [2009 (3) TMI 592 - CESTAT, AHMEDABAD] held the issue in favour of assessee and it was upheld by Hon'ble Karnataka High Court in COMMR. OF SERVICE TAX, BANGALORE VERSUS LAKSHMINARAYANA MINING CO. [2012 (8) TMI 651 - KARNATAKA HIGH COURT]. Extended period of limitation - Penalty - HELD THAT:- As the issue was interpretational in nature and also for the reason that there were notifications exempting service tax for carrying food items which underwent amendment later, it cannot be said that the appellant has suppressed facts to evade payment of service tax. In fact, they were carrying food items as part of PDS. Such transportation would be clearly accounted with government and it cannot be said that appellant has willfully suppressed any facts. In the Show Cause Notice apart from a bald allegation that appellant has suppressed facts, there is no evidence of any positive act of suppression established by the department. The demand invoking extended period cannot sustain - On the same grounds, the penalties imposed under section 76 and 78 of the Finance Act, 1994 is unwarranted. Appeal allowed in part. Issues Involved:1. Demand of service tax under Auctioneering Service.2. Demand of service tax under Business Support Service.3. Demand of service tax under Goods Transport Agency (GTA) Service.Issue-wise Detailed Analysis:1. Demand of Service Tax under Auctioneering Service:The appellants, a cooperative society dealing with commodities such as cotton, groundnut, and turmeric, were alleged by the department to be conducting auction activities, which would fall under the definition of Auctioneering Service introduced on 1.5.2006. However, the appellants argued that their activities did not constitute auctioneering but rather the facilitation of tenders for the sale of their members' agricultural produce. The Tribunal referred to a previous decision in the case of Attur Agricultural Producers Co-op. Mktg. Society Ltd. Vs. CCE, Salem, where similar facts were analyzed, and it was held that the activity did not fall under Auctioneering Service. Consequently, the demand under Auctioneering Service was set aside.2. Demand of Service Tax under Business Support Service:The appellants also faced a demand for service tax under Business Support Service for their activity of providing loans against pledged jewels to their members. The department considered this activity as Business Support Service. However, the appellants contended that their activity was merely lending money to their members and not supporting any business entity. The Tribunal, referencing the same Attur Agricultural Producers Co-op. Mktg. Society case, concluded that lending money to members did not constitute Business Support Service. Hence, the demand under Business Support Service was also set aside.3. Demand of Service Tax under Goods Transport Agency (GTA) Service:In Appeal No. ST/40809/2013, the appellants were also demanded service tax under GTA Service for the period from 1.4.2006 to 31.3.2011. The appellants argued that they were engaged in transporting ration goods for the Public Distribution System (PDS) and that such transportation was carried out by individual truck owners, not by any Goods Transport Agency. They claimed exemptions available under various notifications and contended that the demand was barred by limitation due to the interpretational nature of the issue. The Tribunal acknowledged the exemptions for transporting food grains and pulses and noted the interpretational nature of the issue. It concluded that there was no willful suppression of facts by the appellants. Therefore, the demand for the extended period was set aside, but the appellants were held liable to pay service tax along with interest for the normal period under GTA services.Conclusion:The Tribunal held that the demands under Auctioneering Service and Business Support Service could not be sustained and were set aside. The demand under GTA Service was partly allowed, with the extended period demand being set aside but liability for the normal period being upheld. The appeals were accordingly allowed with consequential relief.Pronounced in open court on 26.02.2021.