M/S. Attur Agricultural Producers� Co-Operative Marketing Society Limited vs Commissioner Of Central Excise

P. Dinesha, Member (J)

This appeal is filed against the common Order-in-Appeal Nos. 168 & 168-A/2014-ST dated 06.08.2014 passed by the Commissioner of Customs and Central Excise (Appeals), No. 1, Foulk’s Compound, Anai Medu, Salem – 636 001.

2.1 Brief facts, as could be gathered from the impugned order, are that the assessee-appellant is a Co-operative Society engaged in conducting auction of various commodities and receives consideration for the same. They also provide place for storage of goods along with post-auction services, which includes collection/distribution of the auctioned price. The subsidiary regulations framed under their by-law allowed the appellant to provide the above service for a consideration of money.

2.2 Entertaining a doubt that the above service fell under the category of “Auctioneer’s Service” as defined under Section 65(7a) read with Section 65(105)(zzzr) of the Finance Act,1994 and that the jewel service charges collected by the appellant from its members for appraisal of jewels for the purpose of loan fell under the category of “Business Support Service” under Section 65(104c) read with Section 65(105)(zzzq) ibid., Statements of Demand dated 12.04.2013 and 20.11.2013 came to be issued proposing to demand the Service Tax under the above categories for the periods from April 2011 to March 2012 and April 2012 to June 2012 respectively.

2.3 Both the above Statements of Demand were considered for common adjudication and a common Order-in-Original Sl. No. 22/2014 JC(ST) dated 28.04.2014 was passed, whereby the adjudicating authority has confirmed the demands proposed therein, along with appropriate interest, apart from imposition of penalties.

Both the assessee and the Revenue preferred appeals before the first appellate authority, who vide Order-in-Appeal Nos. 168 & 168-A/2014-ST dated 06.08.2014 has rejected the assessee’s appeal and allowed the Revenue’s appeal, thereby upholding the above Order-in-Original, except for ordering modification of the penalties imposed.

It is against this order that the present appeal has been filed before this forum.

Heard Shri M.N. Bharathi, Ld. Advocate for the appellant and Shri Anoop Singh, Ld. Deputy Commissioner for the Revenue.

After hearing both sides, we find that the issues that arise for our consideration are: -

(1) Whether the appellant is liable to pay Service Tax under the category of “Auctioneer’s Service”? and

(2) Whether the demand of Service Tax under the category of “Business Support Service” for the jewel appraisal charges collected by the appellant from its members is justified?

7.1 At the outset, we find that this Bench of the Tribunal in the case of M/s. Perundurai Agricultural Producers Co-operative Marketing Society Ltd. v. Commissioner of Central Excise and Service Tax, Salem [Final Order No. 40867 of 2023 dated 05.10.2023 in Service Tax Appeal No. 40675 of 2014 / 2023 (10) TMI 173 – CESTAT, Chennai], relied upon by the Ld. Advocate, had an occasion to examine an identical issue wherein the demand was raised on the assessee therein, inter alia, under the categories of

“Auctioneer’s Service” and “Business Support Service”. After considering the rival contentions, this Bench has observed as under: -

“7. Having considered the rival contentions, and having perused the orders of lower authorities, we find that issues to be decided by us is, on the facts and circumstances of the case, whether the demands under:-

(1) Auctioneer’s Service

(2) Business Support Service

(3) Renting of Immovable Property Service as confirmed and upheld in the impugned order, are correct in law?

8.1 We have also gone through the various orders of this very Bench that were relied upon by the Ld. Consultant during the course of arguments and we find the assertion of the Ld. Consultant to be correct inasmuch as similar issues have been considered and decided in those orders of this very Bench. In the case of M/s. Namakkal Agricultural Producers Coop. Marketing Society (supra), this Bench has observed as under: -

“5.1 The main issue which requires consideration in the instant case is as to whether the appellants are rendering “Auctioneer’s Service” in respect of marketing and other services rendered for selling agricultural produce of its farmer members? The other issues are demand of service tax under BSS and GTA services. Regarding the taxability of appellant’s services under “Auctioneer’s Service”, a numerous judicial decisions have already gone into the differences between Auction and Tender. The Tribunal in M/s. The Salem Starch & Sago Manufacturers Service Industrial Co-operative Society Ltd. Vs. CCE& ST, Salem reported in 2018 (3) TMI 192-Cestat Chennai, has analysed the differences between “auction” and “tender” as under:-

.

.

.

Further, Learned Advocate has drawn our attention to the Tribunal’s Final Order No. 40978/2019 dated 30.07.2019 rendered in respect of M/s. Attur Agricultural Producers Co-operative Marketing Society Ltd. Vs. CCE, Salem, wherein it has been held as under:-

“10. We have considered the arguments on both sides and perused the records. As far as Auctioneers‟ Service is concerned, it can be levied on the service of auctioning. Undisputedly, in the present case, as recorded in the impugned order itself, the appellants are selling goods through tender and NOT through auctions. The Auctioneer’s service does not cover the service of tender. As far as the demand under BSS is concerned, evidently, the cooperative society is engaged in the business of lending money to their members and have been collecting some charge towards appraising the value of the pledged jewels in the process. This is not service rendered to anybody at all. It is true that, in turn, the appellant has been borrowing money from their bank but it does not mean that the appellant is supporting service of the bank. They are borrowing money from the bank on their account and in turn lending it to their members. In view of the above, we find that demands on both these counts are not sustainable and need to be set aside and we do so. Consequently, the demand of interest and penalties also deserve to be set aside. The impugned order is set aside and the appeal is allowed with consequential relief, if any, as per law.”

We find that the facts for our consideration in these two appeals are identical. The marketing and other services rendered by the appellant to their farmer members in selling their agricultural produce through tender process would not be coming under “Auctioneer’s Service under Section 65 (105)(zzzr) of the Finance Act, 1994.

5.2 On the issue of BSS, the facts indicate that the appellants are taking loans from M/s. Salem District Central Co-operative Finance Bank and utilizing this money in providing jewel loans to their farmer members. Thus, the appellant is borrowing the money from the bank on its account and in turn lending it to their farmer members on interest. The services rendered by the appellant are relatable only to its members and not to the bank and the charges collected for appraising jewels before sanctioning of loans are in the nature of cost incurred by the appellant for sanctioning of loans. As such, there is no BSS rendered in the instant case. As such, we hold that the demands raised under the impugned orders demanding service tax under

“Auctioneer Service” and BAS are not maintainable.”

8.2 The above orders cover the case on hand insofar as the issues (1) and (2) above are concerned since these issues have been considered and decided in favour of the taxpayer. Nothing is brought on record before us by the Revenue as to any appeals filed or any stay orders by higher courts against the above orders of the co-ordinate Benches. Hence, we hold that the demands confirmed in the impugned Order-in-Appeal to the above extent deserve to be set aside, which we hereby do.”

7.2 The issues involved being identical, we are of the considered opinion that the ratio laid down in the above case is squarely applicable to the facts of the case on hand. The Revenue has also failed to place on record any decision to the contrary to distinguish the above Order of this Bench (supra). Consequently, following the same, we hold that the impugned order lacks merit, for which reason the same deserves to be set aside, which we hereby do.

The appeal is allowed with consequential benefits, if any, as per law.