CONCOR wins service tax dispute as auction proceeds from abandoned imported goods ruled not taxable service

CESTAT New Delhi dismissed Revenue's appeal regarding service tax levy on auction proceeds of abandoned imported goods by CONCOR. The Tribunal held that auction charges adjusted towards warehousing charges cannot be considered receipt of services, following precedent in Balmer Lawrie case. Court ruled no service recipient exists in such transactions, making service tax demand unsustainable. The issue was settled law favoring assessee, with consistent decisions across different Benches establishing that no service is provided to any person in abandoned cargo auction transactions.

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Issues involved:
The issue in this case is whether the amount accrued to CONCOR u/s 150(2)(d) of the Customs Act, 1962 is a consideration for the provision of storage and warehousing services.

Summary:
The Revenue appealed against the Order-in-Original No. 40/2017- ST dated 31.10.2017, where the Commissioner had dropped the demand of service tax. The appellant, M/s. Container Corporation of India Ltd., was alleged to owe service tax amounting to Rs. 5,12,81,495/- for ground rent/storage rendered towards un-cleared/un-claimed cargo of the importer. The Adjudicating Authority, following a Tribunal decision, dropped the service tax demand. The issue revolved around whether the amount accrued to CONCOR u/s 150(2)(d) of the Customs Act, 1962 constituted consideration for storage and warehousing services.

The Adjudicating Authority's decision was supported by a Tribunal judgment in Balmer Lawrie & Co. Ltd. The judgment emphasized that in the auction of abandoned imported goods, no service recipient existed, thus no service was provided. The auction proceeds were not considered as payment for storage and warehousing services, as they were sale proceeds subject to Sales Tax. The surplus amount retained by the custodian was not in the nature of storage and warehousing service. Various legal provisions and circulars were referenced to support this stance, including Sections 48 and 150 of the Customs Act, 1962, and relevant notifications exempting certain transactions from Service Tax.

The appellant's counsel cited decisions such as Mysore Sales International Ltd. and India Gateway Terminal (P) Ltd. to support the argument that no service tax was leviable in such cases. These decisions reiterated that in transactions involving abandoned cargo, no service was rendered to any person, thus no service tax was sustainable. The judgment concluded that the issue of demanding service tax on auction proceeds of abandoned imported goods had been settled in favor of the assessee, as no service recipient existed in the entire transaction. Consequently, the Revenue's appeal was dismissed for lacking merit.

The judgment was pronounced on 30th April, 2024.

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