Tender document fees are not subject to service tax when they represent the sale of documents.

The appellant collected ₹5,63,200 as tender fees during April 2012 to March 2016.

Following an audit, the Department issued a show-cause notice demanding service tax on receipts that included tender fees and storage charges.

The adjudicating authority confirmed ₹72,071 in service tax on tender fees, with interest and penalty, but dropped the demand relating to storage charges.

The Commissioner (Appeals) upheld the confirmed demand, prompting this appeal.

The appellant maintained that the fees were the cost of printed tender documents, not consideration for a service.

Whether the tender fees collected by the appellant were consideration for a taxable service, or were received for the sale or supply of tender documents

Whether the service-tax demand, together with interest and penalty, could be sustained on those fees

Under the Finance Act, 1994, service tax is chargeable where a taxable service is provided by one person to another for consideration; the Tribunal referred to the definition of “service” under Section 65B(44).

The Tribunal also relied on Rajcomp Info Services Limited v. Principal Commissioner of CGST & Central Excise, Jaipur, Final Order No. 50209 of 2026, which held that tender fees paid for tender documents, absent an identifiable service or quid pro quo, were not consideration for a service.

That decision also referred to Department Circular No. 192/02/2016-ST dated 13 April 2016 and Ajmer Vidyut Vitaran Nigam Ltd. v. Principal Commissioner of CGST & Central Excise, Jaipur, 2024 (11) TMI 1445 (CESTAT, New Delhi).

The Tribunal found that the amount collected represented the prescribed cost of tender documents.

It reasoned that a tender is ordinarily an invitation to offer and does not, merely by its issue, create a service arrangement between the tendering authority and each bidder.

Since the Department had not established an identifiable service provided in return for the tender fee, the receipt was properly characterised as sale or supply of documents rather than consideration for a taxable service.

Applying the reasoning in Rajcomp, the Tribunal concluded that the demand could not stand.

It allowed the appeal, thereby displacing the confirmed tax demand and the associated interest and penalty.

The Tribunal set aside the impugned appellate order.