Before us is Mishnah 9 in the ninth chapter of Maseches Shevi'is. In order to grasp its content, we need to return to the dispute between Beis Shammai and Beis Hillel that was taught in the fourth chapter of the tractate.
The dispute between Beis Shammai and Beis Hillel about expressing gratitude:
Beis Shammai: One may not express gratitude - that is, say thank you - to someone who gave him from shevi'is produce. The Tiferes Yisrael explains this in two ways: in the fourth chapter he explains that the expression of thanks implies that the giver has ownership over the produce, and it therefore appears as though the produce is "guarded," which is not permitted in shevi'is; and here in this chapter he explains that the expression of thanks looks like commerce, as though the giver is doing business with the produce. Either way, there is a display of ownership here, and therefore one should not express gratitude to him and voice the appreciation that a person voices when he says thank you.
Beis Hillel: It is permitted.
The wording of the Mishnah:
"Mi shehayu lo peiros shevi'is shenitnu lo b'yerushah o shenitnu lo b'matanah" - a person who has shevi'is produce in his possession that came to him through inheritance or as a gift.
Rabbi Eliezer says: "Yinatnu l'ochleihen" - he does not eat them by himself alone, but eats them together with another person. The reason, as the commentators explain, is that Rabbi Eliezer holds like Beis Shammai that one may not express gratitude, and in order to minimize the expression of gratitude and the display of thanks, he is required to eat the produce with others.
The Tiferes Yisrael points out here that it is very difficult to express gratitude and voice appreciation toward someone who bequeathed him the produce, since the one who left the inheritance is no longer alive, and in practice it is simply not possible at all. Rather, we are in fact dealing with a case in which, even though there is no expression of gratitude, Rabbi Eliezer nevertheless established a general rule: because in a scenario where gratitude can be expressed, they ruled that he may not eat the produce alone but only with others - for in such a scenario, if he were able to eat alone, he would express gratitude far more readily, and he would not be limited and obligated to eat with other people.
"V'chachamim omrim: ein hachotei niskar" - the Sages disagree and hold that under this arrangement the "sinner" still comes out ahead. The intent is not to a person who actually sins, but to one who is liable to express gratitude: even when eating with others he will still end up expressing gratitude, since he himself is benefiting from the produce. Therefore the Sages say: "Yimachru l'acheirim ud'meihen yis'chalku l'chol adam" - he should sell the produce to others, and the money received for it should be distributed to other people, and in this way he derives no benefit from it at all.
It is worth noting that the Sages themselves hold like Beis Hillel, that expressing gratitude is permitted, and they came here only to speak within Rabbi Eliezer's framework: according to his approach, that one may not express gratitude, his plan of eating the produce with other people is not enough; in order not to express gratitude at all, he would have to make sure that he receives no benefit whatsoever from it.
One who eats from shevi'is dough:
The Mishnah concludes with an additional halachah: "Ha'ochel me'isas shevi'is ad shelo hurmah challasah - chayav misah" - one who eats from dough made from shevi'is produce before challah has been separated from it is liable to death, like one who eats tevel. That is, this ruling applies not only where terumos and ma'asros have not been separated, but even where challah has not been separated.
The Mishnah's point is that even though the produce comes from shevi'is, the obligation to separate challah still rests upon him, and if he does not separate it, he is liable to death just as in any other year. And the reason is this: shevi'is is indeed exempt from terumos and ma'asros, but that is because those obligations take effect at a much earlier stage in the process; challah, however, which does not become obligatory until after the dough has been made, must be separated even in the seventh year.
In summary: in this Mishnah, Rabbi Eliezer and the Sages disagree about the law of shevi'is produce that came to a person through inheritance or as a gift. Rabbi Eliezer, who holds like Beis Shammai that one may not express gratitude, rules that he should eat it with others and not alone; and the Sages, who hold like Beis Hillel and are speaking within his framework, respond that "ein hachotei niskar," and therefore according to Rabbi Eliezer he must sell the produce and distribute the money to everyone, so that he derives no benefit from it at all. At the end we learned that even shevi'is produce is not exempt from the separation of challah, since the obligation of challah takes effect only after the dough has been made, and one who eats from dough whose challah has not been separated is liable to death, like one who eats tevel.