2014 (1) TMI 455 - AT - Service Tax

Demand of service tax - Cost of the service paid by M/s. Tata Motors - whether the value of the services can be split as cost of spare parts and cost of services and as to whether the applicant has the option not to pay tax on the value of the spare parts used - Held that - Debit Notes raised by M/s. Tata Motors for cost of the goods and the components of such Debit Notes is not disputed. That being the case, prima facie, the applicant is eligible for exemption under Notification No.12/2003 and, therefore, we grant waiver of pre-deposit of dues arising from the impugned order for the purpose of admission of the appeal and there shall be stay of collection of such dues during the pendency of the appeal - Stay granted.

Summary

Issues:
Dispute over service tax payment on free services provided during warranty period by an authorized dealer of M/s. Tata Motors.

Analysis:
The judgment revolves around the dispute concerning the payment of service tax on the cost of services provided by an authorized dealer of M/s. Tata Motors during the warranty period of the motor vehicles sold. The central issue is whether the value of the services can be segregated into the "cost of spare parts" and the "cost of services," allowing the applicant to potentially avoid paying tax on the spare parts used. The applicant claimed exemption under Notification No.12/2003-ST, dated 20.06.2003, arguing that the value of goods used in providing services falls outside the scope of Section 67 of the Finance Act, 1994.

The applicant contended that the cost of spare parts was covered by Debit Notes issued by M/s. Tata Motors, indicating that the applicant was eligible for exemption under Notification No.12/2003. The court acknowledged the Debit Notes as evidence of the cost of goods, which was not disputed. Consequently, the court granted a waiver of pre-deposit of dues arising from the impugned order for the appeal's admission. It further ordered a stay on the collection of dues during the pendency of the appeal, based on the prima facie eligibility for exemption under the aforementioned notification.

In conclusion, the judgment clarifies the applicability of service tax on free services provided during the warranty period by an authorized dealer of M/s. Tata Motors. It emphasizes the importance of documentary evidence, such as Debit Notes, in establishing the cost components and eligibility for tax exemptions under relevant notifications. The decision to grant a waiver and stay on the collection of dues during the appeal process reflects the court's consideration of the applicant's prima facie eligibility for exemption based on the provided evidence.