2024 (2) TMI 200 - AT - Service Tax

Agricultural cooperative society wins partial relief from service tax demands on auctioneer and business support services

M/s. The Rasipuram Agricultural Producers Co op. Marketing Society Ltd. (S. No. 318) Versus Commissioner of GST and Central Excise, Salem

M/s. The Rasipuram Agricultural Producers Co op. Marketing Society Ltd. (S. No. 318) Versus Commissioner of GST and Central Excise, Salem - TMI Issues Involved:1. Liability to pay Service Tax under 'Auctioneer's Service'.2. Liability to pay Service Tax under Business Support Service (BSS) and Goods Transport Agency (GTA) services.3. Sustainability of penalties imposed on the appellant.Summary:1. Liability to Pay Service Tax under 'Auctioneer's Service':The Tribunal examined whether the services rendered by the appellant constitute 'Auctioneer's Service' in respect of marketing and other services for selling agricultural produce. It was observed that the appellant's activities, including selling goods through tenders, do not fall under 'Auctioneer's Service'. Numerous judicial decisions have distinguished between auction and tender, concluding that the appellant's services are not taxable under 'Auctioneer's Service'. The Tribunal referenced the decision in M/s. Namakkal Agricultural Producers Co-op. Marketing Society Vs. Commissioner of Central Excise, which supported this view.2. Liability to Pay Service Tax under BSS and GTA Services:- Business Support Service (BSS): The Tribunal found that the appellant's activities of providing jewel loans to members do not constitute BSS. The services rendered are related to its members and not to any external entity, thus not falling under BSS.- Goods Transport Agency (GTA) Services: The Tribunal noted that the appellant undertook the work of lifting and delivering goods to ration shops under the Public Distribution System. It was established that the appellant engaged individual truck owners, not a goods transport agency, and thus was not liable for GTA services. However, the Tribunal directed the Original Adjudicating Authority to re-compute the tax payable, considering the exemptions and abatements available under various notifications.3. Sustainability of Penalties Imposed:The Tribunal held that penalties under Section 78 of the Finance Act, 1994, were not justified. The appellant's failure to submit prescribed half-yearly ST-3 returns did not warrant such penalties, given the interpretational nature of the issues and the appellant's bona fide belief regarding tax liabilities.Conclusion:The Tribunal set aside the demand for Service Tax under 'Auctioneer's Service' and BSS. It remanded the issue of Service Tax on GTA services to the Original Adjudicating Authority for re-computation, considering the applicable exemptions and abatements. The appeal was partly allowed and partly remanded.