2017 (5) TMI 1392 - AT - Service Tax

Whether service tax is payable on the spare parts/consumables used in the service of motor vehicles by the appellant, who is an authorized service station of the manufacturer-Maruti Udyog Ltd.? - Held that - Service tax is not payable on Spares & Consumable shown separately in the invoice and on which admissible VAT/Sales tax is charged or paid - demand set aside. Whether the appellant is required to pay service tax on the amount received from manufacturer for providing three free services to the customer, during the warranty period? - Held that - Payment of bills, for free services, by manufacturer to servicing dealer is an internal arrangement and had nothing to do with the payment for services provided by the selling dealer to customers of car - service tax not payable. Whether the appellant is required to pay service tax on the amount of rent receivable shown in the books of account, admittedly not received? - Held that - service tax was not chargeable at that time on the basis of raising of bills but was leviable only on the receipt of consideration for the service. Accordingly, we hold that no service tax is payable on the rent receivable, but admittedly not received by the appellant. - demand set aside. Appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Whether service tax is payable on spare parts/consumables used in the service of motor vehicles by the appellant, an authorized service station of the manufacturer.
2. Whether the appellant is required to pay service tax on the amount received from the manufacturer for providing three free services to the customer during the warranty period.
3. Whether the appellant is required to pay service tax on the amount of rent receivable shown in the books of account but not received.

Analysis:

Issue 1:
The first issue revolves around the liability of service tax on spare parts/consumables used in servicing motor vehicles by the appellant. The Tribunal noted that the Commissioner relied on a previous Tribunal ruling, which was subsequently overturned by the Supreme Court. The Tribunal held in favor of the appellant, stating that service tax is not applicable on spares and consumables separately invoiced with admissible VAT/Sales tax.

Issue 2:
Regarding the second issue of tax liability on the amount paid by the manufacturer to the appellant for providing three free services during the warranty period, the Tribunal referred to a decision by a Coordinate Bench. The Tribunal concurred with the previous ruling, stating that charges for such services, not received from customers but part of the manufacturer's margin to the dealer, do not attract service tax. Therefore, the Tribunal ruled in favor of the appellant on this issue as well.

Issue 3:
The third issue pertains to the service tax on rent receivable but not received by the appellant. The appellant demonstrated through ledger entries and a certificate from a Chartered Accountant that the rent was booked as receivable but remained outstanding. The Tribunal held that service tax is leviable only upon actual receipt of consideration for the service. As the rent was not received, the Tribunal concluded that no service tax is payable on the rent receivable by the appellant.

In conclusion, the Tribunal allowed the appeal in favor of the appellant on all three issues, setting aside the impugned order. The appellant is entitled to consequential benefits as per the law.