2007 (8) TMI 89 - AT - Service Tax

Demand(service tax) -Revenue imposed service tax on the appellant on the ground of services of the Authorize service station but appellant contended that the services is free services for the vehicles sold by them - tribunal set aside the demand in absence of any evidence by revenue in his support

Summary

Issues:
- Liability to pay Service Tax for free services rendered by Authorized Service Station.
- Evidence of reimbursement for services rendered.
- Validity of demand of Service Tax based on assumptions and presumptions.

Analysis:
1. Liability to pay Service Tax for free services rendered by Authorized Service Station:
The case involved appeals against orders passed by the Commissioner of Central Excise & Customs (Appeals) regarding the demand of Service Tax and Education Cess for the period from 16-7-2001 to 31-3-2005. The appellants, an Authorized Service Station of a vehicle manufacturer, provided free services for the vehicles sold by them. The lower authorities held the appellants liable to pay Service Tax and Education Cess. The appellants contended that since the services were provided free of charge after the purchase of the vehicle, and the purpose was to detect manufacturing defects, no consideration was received, and thus, Service Tax should not be levied.

2. Evidence of reimbursement for services rendered:
During the proceedings, the Departmental Representative argued that there was reimbursement to the appellant for the services rendered, implying that the cost for the services was hidden in the cost of the vehicles. However, when asked to provide evidence of such reimbursement, the representative failed to do so. The Adjudicating Authority's assertion that the cost for the services rendered was included in the vehicle cost was based on assumptions and presumptions, lacking concrete evidence to support the claim of reimbursement. The Tribunal emphasized the importance of concrete evidence to establish reimbursement for services rendered before confirming any demand for Service Tax.

3. Validity of demand of Service Tax based on assumptions and presumptions:
The Tribunal observed that in the absence of evidence demonstrating reimbursement for the free services provided, the demand for Service Tax was unfounded and based on assumptions. The Tribunal highlighted that unless the Revenue could substantiate with evidence that the appellant received reimbursement in some form, confirming the demand for Service Tax would not be justified. Consequently, the Tribunal found no merit in the impugned orders and allowed the appeals with consequential relief, if any, emphasizing the necessity of concrete evidence to support claims of reimbursement for services rendered before imposing Service Tax.

In conclusion, the judgment focused on the necessity of providing concrete evidence of reimbursement for services rendered before levying Service Tax, highlighting the importance of substantiating claims with factual evidence rather than assumptions or presumptions.