TaxTMI 
TaxTMI 
2026 (3) TMI 846
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.... and against penalty imposed under Section 76 and 77 of the Act. Whereas, Department filed an appeal against the same Order-in-Original for non-imposition of penalty under Section 78 of the Finance Act 1994. 2. The facts in brief are that the appellants are engaged in the auctioning of tobacco leaves through their 10 auction platforms situated in Mysore & Hassan Districts of Karnataka for which the appellants are collecting service charges from the growers as well as buyers of the tobacco. During the period 01.05.2006 to 31.03.2008 in terms of Section 65(105)(zzzr) of the Finance Act under the category of 'auction of property' service as defined under Section 65(7a) the demand was made. 3. A Show Cause Notice dated 19.12.2008 was issued against the appellant and they had filed a reply and contested. After due process of law, Learned Commissioner of Service Tax, Mysore vide Order-in-Original dated 24.03.2009/26.03.2009 rejected the contentions of the appellant and confirmed the proposal issued by the Department except to impose penalty under Section 76 of the Act. 4. The Appellant filed an appeal (Appeal No. ST/369 of 2009) against the Order-in-Original before the CESTAT, B....
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....lant submits that the appellant is collecting fee as a statutory levy, such an activity performed by the Board under the provisions of law does not constitute provision of service to a person and, therefore, no service tax is leviable on such activities. In this reference, Learned Counsel for the appellant places reliance on CBEC Circular No. 89/7/2006-ST dated 18.12.2006. 9. Learned Counsel for the appellant submits that for carrying certain functions/activities and collect some statutorily prescribed fee as empowered under the Act, such fee cannot be construed in law as 'consideration' as defined in Explanation to Section 67 of the Finance Act, 1994. In this reference, Learned Counsel for the appellant has relied upon the following decisions: * Commissioner of Central Excise and Service Tax, Ahmedabad-III Vs. Gujarat Industrial Development Corporation [2023 (5) Centax 171 (S.C.)] * Rosmerta Technologies Ltd. Vs. Commissioner of Central Excise and Service Tax, LTU, Delhi [2023 (8) Centax 183 (Tri.-Chan)]. * [Affirmed by the Hon'ble Supreme Court as reported in Commissioner of Central Excise and Service Tax, LTU, Delhi Vs. Rosmerta Technologies Ltd - (....
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....o service tax is leviable on all kinds of fee collected by the Tobacco Board. 13. Learned Counsel for the appellant submits that authorisation fee collected from the traders for registering as a buyer under Regulation 13 of Tobacco Board (Auction) Amendment Regulations 1984 and the said amount is refundable in case the authorisation is refused. Being a registration fee for participating in the auction collected as mandated under the Act with regulations made thereunder, the same is not liable to Service tax for the reasons explained in the foregoing paras, both on merits and also on limitation. Learned Counsel for the appellant submits that a part of the demand under the impugned order is also hit by limitation as the extended period of limitation cannot be invoked in this case, on the reason as stated below: i) During the material period (May 2006 to Sep 2010), the Appellant carried a bona fide belief and continued to carry such belief that the activities performed by them are statutory and therefore outside the purview of Service tax. ii) The controversy regarding the taxability was between the Ministry of Commerce and Industry and the Ministry of Finance vid....
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...., which is an 'agricultural produce' and thus goes out of the purview of 'Storage and warehousing' service. The term 'agriculture produce' has been clarified by the Board at sl. no. 4 of Annexure III of the Order No. 1/2002-ST dated 01.08.2002, as follows: 4. Service provided in relation to agriculture produce and service provided by cold storage is outside the ambit of the levy. Doubts have been raised about the scope of term "agricultural produce". In order to clarify the scope of this term beyond doubts, an order has been issued under the power vested under section 95 of the Finance Act (see Order No. 1/2002-S.T., dated 1-8-2002). As clarified in the order, the term agricultural produce would cover all cereals, pulses, fruits, nuts and vegetables, spices, copra, sugar cane, jaggery, raw vegetable fibres such as cotton, flax, jute etc., indigo, unmanufactured tobacco, betel leaves, tendu leaves, and similar products. However, manufactured products such as sugar, edible oils, processed food etc. will not come under the purview of the term 'agricultural produce'." Hence, the no service tax is applicable on the demurrage charges. 17. Learned Counsel for the appe....
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....ed. This decision of the Delhi High Court was challenged by the Revenue in the Supreme Court and the Government also in Finance Act 2010, amending Section 65(105)(zzzz) retrospectively w.e.f. June 1, 2007 to explicitly include "any other service in relation to such renting". Thereafter the Hon'ble Supreme Court overruled the said decision as reported in 2011 (24) S.T.R. 129 (Del.) by affirming that renting commercial property inherently involves value addition and also upheld the retrospective amendment as a legitimate exercise by Parliament to cure a judicial lacuna. During this entire period of the dispute battled in the courts, neither the tenants paid Service tax nor the Appellant collected Service tax. 21. Learned Counsel submits that while inserting the retrospective amendment to Section 65(105)(zzzz) of the Finance Act, 1994 in Finance Act, 2010 on 01.04.2010, the Government safe guarded the interest of tax payers for any act or omission with regard to offence under the Finance Act, 1994 in the Explanation appended thereto. The show cause notice in this case was issued on 20.11.2011, much after the retrospective amendment was inserted on 01.04.2010, which is reprodu....
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....on. - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable had this amendment not come into force. 22. Learned Counsel for the appellant submits that in terms of the Explanation, no act or omission shall be punishable as an offence in view of the retrospective amendment, hence, any demand has to be for the normal period and therefore the demand beyond the normal period along with interest and penalty cannot be sustained. 23. Learned AR for the Department reiterates the findings recorded in the impugned order and further submits that the appellant provides infrastructure facilities such as auction halls, storage facilities and other amenities to growers and buyers and the fees collected for consideration for service rendered. Therefore, the activities are correctly classified as taxable services under the provision of Finance act 1994. 24. We have carefully considered rival submissions and perused the records. 25. The following issues are to be decided: i) whether the auction fee collected by the Tobacco Board constitutes consideration for taxa....
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....me Court in the case of Krishi Upaj Mandi Samit Vs Commissioner of Central Excise and Service Tax, Alwar [2022 (58) GSTL 129 (SC)], wherein, it was held that the sovereign/public authority under the provisions of law being mandatory and statutory functions and the fee collected for performing such activities is in the nature of a compulsory levy as per the provisions of the relevant statute and it is deposited into the Government treasury, no service tax leviable on such activities. It is also held that if such authority performs a service, which is not in the nature of a statutory activity and the same is undertaken for the consideration, then in such cases, service tax would be leviable. The relevant para of the judgment is as follows: 6. At the outset, it is required to be noted that the respective Market Committees are claiming exemption under the 2006 circular. The exemption circular issued by the Board reads as under :- Circular No. 89/7/2006, dated 18-12-2006 :- "A number of sovereign/public authorities (i.e., an agency constituted/set up by Government) perform certain functions/duties, which are statutory in nature. These functions are performed i....
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....ble on such activities. In paragraph 3, it is also specifically clarified that if such authority performs a service, which is not in the nature of a statutory activity and the same is undertaken for consideration, then in such cases, service tax would be leviable, if the activity undertaken falls within the ambit of a taxable service. Thus, the language used in the 2006 circular is clear, unambiguous and is capable of determining a defined meaning. 28. Applying the ratio of these judgments, we find that the Tobacco Board performs regulatory functions under the statute and the fee collected is a statutory levy. Hence, the auction fee cannot be treated as consideration for taxable service. 29. The next issue is storage and warehousing for which Learned Counsel for the appellant submits that un-manufactured tobacco is an agricultural produce and therefore storage of such goods is excluded from the scope of taxable service. Section 65(102) of the Finance Act define the word "storage and warehousing" as follows: "Storage and warehousing includes storage and warehousing services for goods including liquids and gases but does not include any service provided for storage of ....