2011 (9) TMI 375 - AT - Service Tax

Authorised dealer, authorised service station and also sell and purchase motor vehicle accessories - sales tax is being paid by them on the motor vehicle s gross value - Revenue s contention is that since they are also fixing the accessories in the motor vehicles, such fixing is to be treated as providing services under the category of authorised service station service tax cannot be imposable on the item on which sales tax has been collected - but revenue contended that sales tax is being State subject and Service tax being Centre subject, both are mutually exclusive - As in the case Idea Mobile Communications Ltd. vs. CCE, Trivandrum 2006 -TMI - 649 - CESTAT, BANGALORE Held that appellant contention is required to be accepted and confirmation of service tax or imposition of penalty upon them is not sustainable - Appeal allowed with consequential relief.

Summary

Issues:
Interpretation of sales tax and service tax liability on fixing accessories in motor vehicles.

Analysis:
The case involved a dispute regarding the liability of service tax on an appellant who was an authorized dealer of a motor vehicle company and also operated as an authorized service station. The appellant sold and fixed various accessories on motor vehicles, with bills reflecting the total gross value received from customers. The Revenue contended that fixing accessories amounted to providing services under the category of an authorized service station, demanding a 2% charge on the total value. The appellant argued that fixing accessories was incidental to sales, and since they paid sales tax on the entire gross value, no service tax should be imposed.

The Revenue argued that sales tax and service tax were mutually exclusive as they fell under State and Central subjects, respectively. They maintained that paying sales tax did not exempt the appellant from service tax liability. However, the appellant relied on a Tribunal decision and a Supreme Court judgment to support their position that if sales tax had been paid on the entire consideration, no service tax could be imposed.

The Tribunal, after considering the arguments from both sides, relied on the decision in the case of Idea Mobile Communication Ltd., which was based on the Supreme Court's judgment in the case of Gujarat Ambuja Cements Ltd. The Tribunal reiterated that once sales tax had been paid on the entire consideration, service tax could not be levied. Therefore, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant, concluding that the confirmation of service tax or penalty was not sustainable in this case.

In conclusion, the Tribunal's decision was based on the principle of mutual exclusivity between sales tax and service tax, as established by previous legal precedents. The appellant's payment of sales tax on the total gross value exempted them from any additional service tax liability on the same transaction, leading to the appeal being allowed with consequential relief granted to the appellants.