2018 (3) TMI 697 - AT - Service Tax

Time limitation - Business Auxiliary Services - Held that - in an identical situation, this Tribunal in the case of South City Motors Ltd. Vs. CST, Delhi 2011 (11) TMI 408 - CESTAT, NEW DELHI has held that levy of service tax for providing loans to various customers was highly contentious and no malafides or suppression can be attributed and the demand should be confined within the normal period of limitation - In this case, since the SCN was issued beyond the normal period provided under Section 73 ibid, the proceedings initiated by the Department are squarely barred by limitation of time. Levy of service tax - sale of goods - principal agent relationship - Held that - there is no involvement of any principal and agent relationship and essentially the transaction between the assessee and Maruti Suzuki are on principal to principal basis, with reference to sale of goods, such transaction cannot be termed as a service for the purpose of levy of service tax - decided against Revenue. Appeal disposed off.

Summary

Issues:
1. Whether the demand for service tax on services provided by the appellant is barred by limitation.
2. Whether the incentives received by the appellant from a manufacturer should be considered taxable under Business Auxiliary Service.

Analysis:

Issue 1:
The appellant contested a service tax demand on the grounds of limitation, as the show cause notice was issued beyond the normal period prescribed under Section 73 of the Finance Act, 1994. The Tribunal referred to a similar case and held that the demand should be confined within the normal period of limitation. Since the show cause notice was issued beyond the normal period, the proceedings initiated by the Department were deemed barred by limitation. Consequently, the service tax demand confirmed against the appellant was not sustainable on the ground of limitation.

Issue 2:
Regarding the incentives received by the appellant from a manufacturer, the Revenue contended that these should be considered taxable under Business Auxiliary Service. However, the Commissioner (Appeals) noted that there was no principal and agent relationship between the appellant and the manufacturer. It was established that the transactions were on a principal to principal basis, relating to the sale of goods. As per established law, incentives received in such a scenario cannot be termed as commission. The Tribunal dismissed the Revenue's appeal, stating that the transactions did not qualify as a service for the purpose of levy of service tax. Therefore, the appeal filed by the Revenue was found to lack merit and was accordingly dismissed.

In conclusion, the Tribunal ruled in favor of the appellant on the issue of limitation, holding the demand for service tax as barred by limitation. Additionally, the Tribunal dismissed the Revenue's appeal regarding the incentives received by the appellant, stating that the transactions did not constitute a taxable service under Business Auxiliary Service. Both appeals were disposed of accordingly.