2015 (10) TMI 453 - AT - Service Tax

Disallowance of Cenvat credit - Input services - Trading activity - promotion of the Authorised service station - Held that - Appellants are dealers of Maruti Suzuki India Ltd and that they are also having Authorised service station for the same. The sale of cars depends upon the after sales service and customer support offered by the dealer. Therefore the activity of service and maintenance of vehicles is of no less importance. At no stretch of imagination it can be said that any promotional activity by conduct of entertainment shows or otherwise would increase the selling business of the appellant alone and that it does not benefit the Authorised service station. The view taken by the authorities below, that the activity of servicing of vehicles is only an auxiliary activity which is attached with the sale of cars is highly untenable. Only because the appellant are engaged in the business of dealership of cars also it would be highly incorrect to hold that the entertainment shows/promotional shows conducted by the appellants was for promotion of sale of cars alone and not for promotion of servicing of Maruti cars at their Authorised service station. At any rate, the decor and entertainment show/event management services qualifies as input service under the wide definition applicable at the relevant period. - Decided in favour of assessee.

Summary

Issues: Disallowance of Cenvat credit on input services.

In this case, the appellant challenged the disallowance of Cenvat credit on input services related to decor and entertainment shows provided at their workshop in Ajmer. The dispute arose from a show cause notice alleging wrongful availment of credit amounting to Rs. 3,51,393. The notice resulted in a demand confirmation, penalty imposition, and interest. The appellant contended that the services were aimed at promoting the servicing of vehicles through their Authorized service station, particularly for attracting customers for vehicle servicing. The authorities, however, viewed the celebration of the appellant's 25th anniversary as related to their car dealership rather than the promotion of vehicle servicing. The appellant argued that the after-sales service and customer support, including vehicle maintenance, were crucial for car sales, emphasizing that promotional activities like entertainment shows benefit both car sales and the Authorized service station. The appellate tribunal found the authorities' view untenable, stating that the entertainment shows qualified as input services under the relevant definition. Consequently, the tribunal allowed the appeal, setting aside the disallowance and granting the appellant the credit amount.

This judgment primarily deals with the disallowance of Cenvat credit on input services related to decor and entertainment shows at the appellant's workshop in Ajmer. The key issue was whether these services were for promoting the appellant's car sales or for the benefit of their Authorized service station. The appellant argued that the services aimed to attract customers for vehicle servicing, essential for car sales success. The authorities, however, interpreted the celebration of the appellant's 25th anniversary as related to their car dealership, not the service station promotion. The tribunal rejected this view, emphasizing the importance of after-sales service and maintenance for car sales and concluding that the entertainment shows qualified as input services. As a result, the tribunal allowed the appeal, overturning the disallowance and granting the appellant the credit amount.