TMI Blog2018 (3) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... cope of Auctioneer Service, cannot sustain - appeal allowed - decided in favor of appellant. - ST/467 - 468/2009 - Final Order No. 40457-40458/2018 - Dated:- 20-2-2018 - Ms. Sulekha Beevi, Member (Judicial) And Shri Madhu Mohan Damodhar, Member (Technical) Ms. Sweta Giridhar, Advocate Shri Balaji Sai Krishnan, Advocate for the Appellant Shri R. Subramaniyam, AC (AR) for the Respondent ORDER Per Bench The appellants are a Co-operative Society consisting of members wherein the members are manufacturers of starch and sago. Appellants undertake the sale of starch and sago through a system of sale by tendering as per the terms and conditions of the By-laws of the society. Towards this activity, society collects service charges from the concerned members. The sale is effected by two types of tendering process I and II. In type-I sales there is no upset price fixed before sale of goods. The member manufacturer, who has offered the goods for sale has the option to reject or accept the offer of bid by the tenderer. In type-II sales, where minimum price is fixed, the sale is automatically confirmed in favour of the merchant who has quoted the highest price provided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its that type-I auction there was an option for rejection of the highest bid whereas in an auction process the highest bid is always accepted. 3. On the other hand, Ld. AR, Shri R. Subramaniyam, AC, supports the impugned order. He submits that in type-II tenders the highest price is accepted. The purpose of the tendering process is only to secure the best price for the members of the society. Ld. AR takes us to the findings of the original authority to highlight that the appellants provide a facility for easy interaction between the manufacturers and buyers to provide short term storage services and also undertake pre-auction price assessment which are of essential ingredients of the auction of property service. Ld. AR also takes us to para5.4 of the impugned order wherein the adjudicating authority has analysed the activities of the appellants and has shown that they very much fall within the scope of Auctioneer service . 4. Heard both sides. 5.1 For better appreciation of the issue in dispute, the definition of Auction of Property Service under Section 65 (7a) is reproduced as under:- auction of property includes calling the auction or providing a facility, adverti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of auctioneer s service. 5.4 The lower appellate authority has, in para 5.4 of the impugned order, compared the definitions of tender and auction put forth by the appellants; interalia that advertisements or other invitations calling for tender for purchase of goods is not normally an offer but an invitation to treat and that there is no obligation to accept the highest or lowest tender or indeed any tender; on the other hand an auction is sale by competitive bidding, normally held in public, at which prospective purchasers are invited to make successively increasing bids for the property, which is then usually sold to the highest bidder. The bidding process is conducted in such a manner with all intending bidders are aware, immediately, and on real time basis and the bids made by others. That an auction sale is to be distinguished from a sale by fixed bidding when each bidder must specify a fixed amount and has no opportunity to adjust his bid by reference to rival bids. 5.5 We find merit in these contentions of the appellant. An auction is a live process where all prospective bidders are present at the same time and where the system is transparent enough for each bidder t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Tender: In an auction, a number of persons attempt to outbid each other; in any system of tenders, though the spirit of outbidding by closed offer is inherent, yet one cannot complete for the 2nd and 3rd time. Moreover, when tender is given, the tenderer gives the bid in documents without knowing the offer or bid of the other tenderer: Kalyan Singh Vs. DAH 1981 NOC 24 Raj. (iii) In Gulab Singh Vs. Chandrapal Singh and Ors. (supra), relied upon by the Ld. Advocate the Court had occasion to analyse whether the mode of sale by calling offers by advertisement can be said to be a form of a public auction, as follows:- 17. However, the principal question to be considered in the instant case is as to whether the mode of sale by calling offers by advertisement can be said to be a form of a public auction. In support of the contention that the mode of calling for offers by advertisement is not a sale by public auction the provisions of section 64 of the Sale of Goods Act q930 are brought to my notice by the learned counsel for the applicant to show what an auction sale means or how it is understood. The main feature distinguishing the auction sale from other sales which is pointed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by calling for offers through advertisement can be said to be a sale by public auction. By relying upon the decision of this Court in Digambar Tatya Utpat vs. Hari Damodar Utpat (AIR 1927 Bombay 143), it is submitted on behalf of the non-applicant No. 7 that there can be a limited court auction in which the class of bidders can be restricted. In my view, the said analogy is not apt. Even in the case of limited auction the principal characteristic of an auction sale about raising a bid at the spot would remain present which is totally absent when there is sale by tender or by calling for offers. The above decision is, therefore, of no assistance to the non-applicant No.7. (iv) The Hon ble Supreme Court in the case of Puxomoma Ramanata Quenin Vs. Makan Kalyan Tandel and Ors. (supra) has also brought forth the distinction between auction and tender as follows:- The aforesaid paragraph, it would thus appear, relates to auction and not to calling of sealed tenders. An auction, as stated in Halsbury s Laws of England, Third Edition, Vol. 2, page 69, is a manner of selling or letting property by bids and usually to the highest bidder by public competition. An invitation to tend ..... X X X X Extracts X X X X X X X X Extracts X X X X
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