2015 (2) TMI 1167 - AT - Service Tax

Waiver of pre-deposit - Amount of service tax liability interest thereof and penaltied imposed - Amount received are not for service rendered - Applicant submitted that amount received towards incentives from Mahindra & Mahindra Ltd. are target based and on sale of the vehicles - Held that - the issue needs deeper consideration as to come to a conclusion that incentives which are given to the applicant are for the sale of vehicles by the Mahindra & Mahindra or otherwise. It is seen from the letter of Mahindra & Mahindra the manufacturer indicates that an amount for incentives have been credited to the account of the applicant for various sales promotion schemes incentives and support to boost the sales of your dealership. Therefore the issue needs deeper consideration though the applicant would rely on the decision of CST Mumbai-I Vs. Sai Service Station Ltd. 2013 (10) TMI 1155 - CESTAT MUMBAI (T) wherein it has been held that sales/target incentive is not taxable. Since factual matrix has to be gone into detail the applicant has not made out a prima facie case for complete waiver. The applicant should put to condition for hearing and dispose of the appeal. - Complete waiver not granted

Summary

Issues:
Stay petition for waiver of pre-deposit of service tax liability, interest, and penalties imposed on amounts received as incentives and for providing table space.

Analysis:
The adjudicating authority concluded that the applicant must deposit service tax liability on amounts received from Mahindra & Mahindra Ltd. as incentives and from various banks and insurance companies for providing table space. The learned Counsel argued that the incentives received were target-based and related to vehicle sales, not services rendered. The Tribunal found that a deeper consideration was needed to determine if the incentives were for vehicle sales promotions or other purposes. While the Counsel cited a precedent where sales/target incentives were deemed non-taxable, the Tribunal held that a prima facie case for complete waiver was not established. The Tribunal directed the applicant to deposit Rs. 12,00,000 within eight weeks and report compliance, allowing a waiver of pre-deposit for the remaining amount pending appeal.

This judgment highlights the importance of analyzing the purpose and nature of incentives received to determine their taxability. It emphasizes the need for a detailed examination of factual circumstances to make informed decisions on tax liabilities. The Tribunal's decision to require a partial deposit reflects a balanced approach to ensure compliance while providing relief pending appeal. The case underscores the complexity of tax issues related to incentives and the significance of legal arguments and supporting evidence in tax disputes.