2012 (5) TMI 520 - AT - Central Excise

CENVAT Credit - Credit taken on freight amount involved in transporting the motor vehicles from the factory to the dealer s premises - Held that - The respondents are undisputedly having dual roles, one as dealer of the motor vehicle and the other as the authorized service station. The GTA services utilized for the purpose of transport of the vehicle to the dealer s premises relate to their activities as a dealer. This GTA services cannot be treated as input services in respect of activities undertaken by the respondent as authorized service station - The activity of providing Teflon Coating at the time of sale cannot be construed as a service or repair provided by an authorized service station even though the same dealer may also be authorized to carry out after sale services. The authorized sales dealer and authorized service station are appointed to perform two distinct functions for the car manufacturer and therefore the activity performed at the time of sales of vehicle by the dealer is distinct from the service provided by the authorized service station. Normally, authorized service station comes into picture only after vehicle comes on road. Therefore, it is envisaged appears that any activity of sales dealer at the pre-sale stage or at the time of sale will not come under the purview of service tax - GTA services utilized for transport of the motor vehicles cannot be treated as input services for the activities of the respondent relating to the authorized service station - Decided in favour of Revenue.

Summary

Issues:
Department's appeal against Commissioner (Appeals) order disallowing credit for service tax paid on freight amount for transporting motor vehicles.

Analysis:
The case involved an appeal by the department against the order of the Commissioner (Appeals) regarding the disallowance of credit for service tax paid on the freight amount involved in transporting motor vehicles from the factory to the dealer's premises. The respondents were authorized dealers of Hero Honda Motorcycles and accessories, paying service tax as an authorized service station service. The original authority disallowed the credit, imposed a penalty, and levied interest. The Commissioner (Appeals) set aside the original authority's order, leading to the department's appeal.

During the proceedings, the learned Superintendent (AR) argued that the activities of the respondents as a dealer of vehicles were distinct from their activities as an authorized service station. Referring to a Board's Circular, it was contended that GTA services utilized for transporting vehicles to the dealer's premises should not be considered as input services for the activities of the authorized service station.

Upon careful consideration, the Tribunal noted that the respondents had dual roles as a dealer and an authorized service station. The GTA services used for transporting vehicles to the dealer's premises were deemed to be related to their dealer activities, not the authorized service station activities. The Tribunal referenced the Board's clarification, emphasizing the distinction between activities performed by a sales dealer and those provided by an authorized service station. Consequently, the Tribunal found merit in the department's appeal, setting aside the Commissioner (Appeals) order and restoring the original authority's decision.

In conclusion, the Tribunal allowed the appeal, overturning the Commissioner (Appeals) order and reinstating the original authority's decision. The judgment highlighted the importance of distinguishing between the roles and activities of the respondents as a dealer and as an authorized service station, ultimately impacting the eligibility of certain services for tax credit.