2015 (5) TMI 773 - AT - Service Tax

Waiver of pre deposit - Non inclusion of value of spares - Free service during warranty period - Held that - In the case of free service provided by the applicant on behalf of M/s TKML to the customers of M/s TKML is reimbursing whole of the expenses incurred by the applicant i.e. service charges plus cost of spares during the period of warranty. The applicant is paying service tax on the service part of the transaction and not paying service tax on the value of spares replaced during the period of warranty had been reimbursed by M/s TKML . In this situation also that value of spare replaced during the period of warranty is not includible in the taxable service. Therefore, the applicant has made out a complete waiver of pre-deposit - following the precedent decision in applicant s own case 2015 (5) TMI 670 - CESTAT NEW DELHI the applicant has made out a case for complete waiver of pre-deposit - Stay granted.

Summary

Issues:
1. Liability to pay service tax on spares replaced during service.
2. Liability to pay service tax on spares replaced during warranty period.

Analysis:
1. The judgment addresses the issue of the applicant, an authorized service station, not paying service tax on spares replaced during service. The Revenue argues that the value of spares should be included in the taxable service. However, the Tribunal, based on a previous case, found that the value of spare parts is not includible in the taxable service. Consequently, the Tribunal granted a complete waiver of pre-deposit on this issue.

2. Another issue discussed is the applicant providing free service during the warranty period to customers of a specific company. The applicant recovers service charges and warranty claims reimbursement from the said company but does not pay service tax on the value of spares replaced during the warranty period. The Tribunal ruled that the value of spares replaced during the warranty period is not includible in the taxable service. Therefore, the Tribunal granted a complete waiver of pre-deposit on this issue as well.

3. The judgment follows a precedent set in the applicant's own case regarding the liability to pay service tax on spares. The Tribunal found that the applicant is entitled to a complete waiver of pre-deposit on both issues. Consequently, the requirement of pre-deposit of the entire amount of service tax, interest, and penalty is waived, and the recovery thereof is stayed during the appeal's pendency.

4. Additionally, the Registry is instructed to tag this appeal with another related appeal for further proceedings. The judgment concludes by stating that the decision was dictated and pronounced in open court, signifying the official nature of the ruling.