2013 (10) TMI 295 - AT - Service Tax

Business Auxiliary Service - Commission on Promotion and Marketing Waiver of Pre-deposit - The applicants were dealers of motor vehicles manufactured by Hyundai Motors India Ltd. Applicants are purchasing and selling the cars - Revenue issued notice for demanding service tax in respect of the amounts of commission/incentives received from the manufacturer of motor cars on account of promotion and marketing of the motor vehicles Held that - The demands were based in respect of the amounts of all discounts on all models of cars received from the manufacturer on account of promotion and marketing of the motor vehicles and not in respect of particular models - incentives were received in respect of all the models as quantity discounts or prompt payment discounts in respect of purchase of motor vehicles, therefore applicants have made out a prima facie case for total waiver of service tax - The pre-deposit was waived and recovery was stayed during the pendency of the appeal. Stay Granted.

Summary

Issues Involved:
Stay applications for waiver of pre-deposit of service tax on incentives received from the manufacturer of motor vehicles for promotion and marketing.

Analysis:
The applicants, dealers of motor vehicles, were issued show-cause notices demanding service tax on incentives received from the manufacturer for promoting and marketing motor vehicles. The contention was that the discounts received were in the form of prompt payment and quantity discounts, not Business Auxiliary Service (BAS). The applicants relied on a previous stay order in a similar case. The Revenue argued that manufacturers provide incentives for car sales, citing a previous case where the Tribunal directed part deposit of service tax. The Tribunal reviewed dealership agreements and found that incentives were received for all car models, unlike the previous case where it was only for specific models. Thus, the previous case's ratio was deemed inapplicable. The Tribunal concluded that incentives were received for all models as discounts on car purchases, supporting a prima facie case for total waiver of service tax. Therefore, the pre-deposit was waived, and recovery stayed during the appeal's pendency. The stay petition was allowed.