2009 (1) TMI 18 - AT - Service Tax

Authorized service station - appellants provided 3 services to the customers during the warranty period of sale of car as per direction of M/s. Tata Motors Ltd. - issue involved in this case has already been decided by the Tribunal in favour of the assessee in the case of Hindustan Auto House (P) Ltd. vs. CCE, Jaipur, and also in the case of K.P. Automobiles Pvt. Ltd. vs. CCE, Jaipur therefore, demand of tax is not sustainable

Summary

Issues involved:
Interpretation of service tax liability on free services provided during warranty period.

Analysis:
The case involved the issue of service tax liability on free services provided by the appellant during the warranty period of a car sale. The Tribunal referred to previous decisions in similar cases, such as Hindustan Auto House (P) Ltd. vs. CCE, Jaipur, and K.P. Automobiles Pvt. Ltd. vs. CCE, Jaipur, where it was established that the value of such services is already included in the price of the vehicle paid by customers. The Tribunal noted that no evidence was presented to show that the vehicle manufacturer specifically reimbursed amounts for the free services. The absence of reimbursement and the lack of service charges paid by customers led the Tribunal to conclude that the demand for tax and imposition of penalties were not sustainable.

The Tribunal, based on the precedent and the lack of evidence of reimbursement for the free services, decided to set aside the impugned order and allowed the appeal with consequential relief. The judgment highlighted that the service provider did not receive any service charge from the service recipient and that there was no specific reimbursement by the vehicle manufacturers towards the free services. This conclusion was crucial in determining the service tax liability and the sustainability of the demand for tax and penalties. The decision was made after considering the submissions from both sides and perusing the records, emphasizing the importance of evidence and legal precedent in tax liability cases.

In conclusion, the judgment provided clarity on the service tax liability concerning free services provided during the warranty period of a car sale. By relying on previous decisions and analyzing the lack of evidence of reimbursement, the Tribunal ruled in favor of the appellant, setting aside the tax demand and penalties. The decision underscored the necessity of demonstrating reimbursement and the inclusion of service charges in determining service tax liability, ultimately providing relief to the appellant in this case.