2016 (2) TMI 392 - AT - Service Tax

Valuation - inclusion of handling charges @ of 1% of the price of spares used in the repairing motor vehicles - Held that - s the Commissioner (Appeals) finding that the handling charges were in relation to sale of goods and not in relation to provision of service is sustainable; there was no service involved in sale of such spares across the counter. - such handling charges were held to be not liable to service tax. - No demand - Decided in favor of assessee.

Summary

Issues:
Interpretation of handling charges for service tax calculation.

Analysis:
The case involved an appeal by the Revenue against an order setting aside a service tax demand. The dispute centered around whether handling charges should be included in the assessable value for service tax calculation. The appellant had purchased parts for vehicle repairs, including handling charges, from a supplier and then sold the parts to customers at the same price, inclusive of the handling charges.

The Commissioner(Appeals) concluded that the handling charges were related to the sale of spares and not to any service provided by the appellant. This decision led to the order-in-original being set aside.

The Revenue argued that the handling charges constituted a service and not a part of the sale of goods. They contested the reliance placed by the Commissioner(Appeals) on certain judgments, claiming it was misplaced.

The respondent's advocate supported the impugned order and cited a relevant CESTAT judgment to strengthen their argument.

Upon considering both sides' contentions, the Tribunal found that the handling charges were recovered by the appellant for both repair-use spares and counter-sale spares. The Commissioner(Appeals)'s determination that the handling charges pertained to the sale of goods and not service provision was upheld. The Tribunal also noted that the handling charges were part of the invoice value subject to sales tax, aligning with a previous CESTAT judgment.

Referring to another CESTAT case, the Tribunal emphasized that handling charges in similar situations were not liable to service tax. They further highlighted that no service tax is leviable on transactions treated as the sale of goods and subject to sales tax or VAT.

Consequently, the Tribunal found no flaws in the impugned order and dismissed the Revenue's appeal.