Customs, Excise and Gold Tribunal - Bangalore
Cce vs Cardamom Mkg. Corporation And Indian ... on 18 September, 2007
Equivalent citations: 2008[9]S.T.R.247, [2008]13STT158
ORDER
R.K. Abichandani, J. (President)
1. The Revenue has challenged the order of the Commissioner (Appeals) holding that, the respondents, who were auctioneers, engaged in the business of conducting cardamom auction, cannot be categorized as "clearing and forwarding agent", as held by the adjudicating authority.
2. In both these appeals, the respondents were engaged in the activity of cardamom auctioning which is governed by the terms and conditions of the licence and the marketing rules known as the 'Cardamom (Licensing and Marketing) Rules, 1987'. In the process, the growers or dealers brought to them cardamom which was to be sold by the licenced auctioneer, at a place, on a day and time specified by the Board as stipulated in the licence issued Under Rule 4(3) of the said Rules. According to the Revenue, the activities undertaken by the respondents of receiving and storing cardamom, drawing samples and selling cardamom at the auction for a commission of 1% was an activity falling under the taxable service of clearing and forwarding agents.
3. The learned Authorized representative for the Department strongly contended that, the fact that the respondents were obliged to receive the goods from the growers and dealers, store them, draw their samples and show them to the prospective buyers and maintain the records of the goods received and sold and also prepare reports showing the said transactions, were the activities of clearing and forwarding agent, as defined Under Section 65(25) of Chapter V of the Finance Act, 1994, and contemplated under the Trade Notice No. 103/97 of Cochin Commissionerate issued on July 15, 1997.
4. It is evident from the material on record that the sale of cardamom is statutorily regulated. In exercise of the powers conferred by Section 38 of the Spices Board Act, 1986, the Central Government made the said Rules on 26th February, 1987. By these Rules, business in cardamom was regulated. It was provided in Rule 3 that no person shall carry on business as auctioneer or dealer of cardamom except and in accordance with the terms and conditions of a licence issued under the said Rules and such other instructions as may be issued from time to time by the Spices Board for the development of the cardamom industry. It was also provided in Sub-rule (2) of Rule 3 that no producer of cardamom shall sell his produce otherwise then through a licenced auctioneer or to a licenced dealer. The Board was empowered by the proviso to Sub-rule (2) to require producer to sell their produce to the licenced dealers through auctions alone. Rule 4 provided for licencing of persons to carry on business of cardamom as auctioneer or dealer for which application was required to be made in the prescribed Form-A. Provisions for renewal, validity, suspension, cancellation, appeal etc. were also made with which we are not concerned in the present case.
5.1 The application in Form-A required to be made by a person wanting to do business in cardamom as auctioneer or dealer contained clauses against which various particulars including place of auction, day/time/frequency of auction, storage facility/location of godown, facilities for grading of cardamom etc. were to be given.
5.2 The foremost condition of the auctioneer's licence (in Form-B Under Rule 4(3)) was that the auction should be conducted at a place, on a day, and time specified by the Board and that the auctioneer shall not charge more than 1% of the sale price as commission for the services rendered by him. From condition 2(b) it appears that, the auctioneer could not charge any payment over and above the 1% commission due to him. It was the duty of the auctioneer to ensure that the owner gets his value for the entire quantity of cardamom sold in the auction. The auctioneer was required to recover payment due from the bidders within 14 days from the date of auction and to pay the same to the grower within 21 days from the date of auction. The information in this regard was required to be furnished to the Board for each auction.
5.3 On close scrutiny of the nature of functioning of the licenced auctioneer and the terms and conditions incorporated in the licence which regulated the cardamom business of the licensee, it becomes obvious that, there was no clearing or forwarding activity involved while the licensee acted only as an auctioneer for selling cardamom brought to him by growers/dealers. Subject to the statutory regulation and licensing of cardamom business under the Rules, the auction sale would be complete when the auctioneer announces its completion by the fall of the hammer or in any other customary manner as contemplated by Section 64(2) of the Sale of Goods Act. While the law regulates the manner in which cardamom will be sold, it does not purport to regulate the price at which it would be sold and the matter is obviously left to the choice of the owner for fixing a reserved or up set price. Though the provision, defining "auction of property" Under Section 65(7a) and 65(105)(zzzr) have been inserted w.e.f. 18.04.2006, they indicate the nature of taxable service which involves the activity of calling the auction or providing a facility, advertising or illustrating services, pre-auction price estimate, short term storage services, repair or restoration services in relation to auction of property. Auction of property under directions or orders of a Court of Law or orders by the Government is excluded. We are referring to this provision for a very limited purpose of bringing out the fact that, short term storage can also take place while rendering service in relation to auction of property. Mere receiving and storing goods for auctioning them has nothing to do with clearing and/or forwarding operations contemplated under the taxable service of 'clearing and forwarding agent'. Since neither the provisions having bearing on the activity done by these auctioneers as regulated by the Rules and the licensing conditions nor any evidence on record indicates an activity of clearing or forwarding operation, there is no warrant for resorting to the category of taxable service of clearing and forwarding agent for including the services provided by the respondents for cardamom business as licenced auctioneers. There is, therefore, no warrant for interfering with the impugned order on any of the grounds urged on behalf of the Revenue. Both the appeals are, therefore, dismissed.
(Dictated and pronounced in the open Court on the 18th day of September, 2007)