No Service Tax Demand under ‘Auctioneer’ Service’ on  Commission Received by Cooperative Society in Conducting Action: CESTAT [Read Order]

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that service tax is not demandable under  ‘auctioneer’ service’ on the commission received by the cooperative society in conducting the action. The bench decided in the appeal filed by the Rasipuram Agricultural Producers Co-operative Marketing Society Limited.

The appellant is a cooperative society and is conducting an auction of various commodities for which they receive consideration in the form of commission/service charges. They also provide a place for storage of goods, apart from providing post-auction services like collection or distribution of auctioned prices, etc. 

The Revenue doubted that the above services of the appellant were covered under ‘auctioneer’s service’ as defined under Section 65(7a) and Section 65(105)(zzzr) of the Finance Act, 1994.

The appellant though did not arrange any transport facility, but had paid freight in respect of movement of ration goods (Public Distribution System) for Fair Price Shops and also for the purchase of goods to the society, but did not pay any Service Tax towards GTA service, as defined under Section 65(50b) read with Section 65(105)(zzp) of the Finance Act, 1994.

The appellant society was lending jewel loan facility to its members on an appraising charge of Rs.3/- per thousand on the amount of loan, subject to a minimum of Rs.10/- and a maximum of Rs.100/-, per loan. The adjudicating authority dropped the demand raised under the business support service. On appeal, the first appellate authority rejected the appeal.

The appellant has also argued that during the relevant period when GTA services were introduced (w.e.f. 1-1-2005), the understanding was that when individual truck owners are engaged the activity would not fall under the definition of GTA and that there was no liability to pay service tax.

It was observed that the appellant was carrying food items as part of PDS and such transportation would be accounted for by Government and it cannot be said that the appellant has wilfully suppressed any facts.

A two-member bench comprising Mr P Dinesha, Member (Judicial) and Mr M Ajit Kumar, Member (Technical) set aside the imposition of penalty under Section 76 of the Finance Act, 1994.

The CESTAT sustained the proportionate penalties on GTA service, imposed under Section 77(1)(a) and 77(2) for non-obtaining Service Tax Registration as stipulated under Section 69 and for non-furnishing of statutory ST-3 returns as required under Section 70 respectively.

Shri M.N. Bharathi appeared for the appellant and Shri N. Satyanarayanan, Assistant Commissioner appeared for the respondent.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates