2018 (5) TMI 114 - AT - Service Tax

Business Auxiliary Services - commission for providing the service of arranging loans from the financial institutions on behalf of the manufacturer - Held that - the Commission received by Maruti Udyog Ltd. has already suffered service tax - the issue is covered by the judgment of this Tribunal in the case of SAI Service Station Ltd. 2013 (10) TMI 1155 - CESTAT MUMBAI , where it was held that demanding duty on the same amount again amounts to double taxation - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against order in appeal passed by Commissioner of Central Excise, nature of commission received by authorized dealer, recovery of service tax on commission, applicability of principle of double taxation.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise Surat-I regarding the nature of commission received by an authorized dealer of Maruti Udyog Ltd. The dealer received commission for arranging loans from financial institutions on behalf of the manufacturer. The issue arose when the Revenue alleged that the commission received was in the nature of Business Auxiliary Service, leading to a demand for recovery of a specific amount along with interest and penalty. The Ld. Commissioner (Appeals) allowed the dealer's appeal, prompting the Revenue to file an appeal. The Revenue contended that the commission received by the dealer should be subject to service tax, despite Maruti Udyog Ltd. already paying service tax on the same amount.

The authorized dealer's representative argued that Maruti Udyog Ltd. received commission from finance companies for arranging loans, and out of this commission, a portion was passed on to the authorized dealers. It was highlighted that Maruti Udyog Ltd. had already paid service tax on the entire commission received. The representative cited precedents to support the argument that recovering tax again from the authorized dealers would amount to double taxation, referencing cases such as Commissioner of Service Tax Mumbai vs SAI Service Station Ltd. and Sharyu Motors vs CST Mumbai. The Tribunal noted that the issue was covered by the judgment in the case of SAI Service Station Ltd., where it was observed that demanding duty on an amount already subjected to service tax would constitute double taxation.

After analyzing the evidence, the Tribunal found that the commission received by Maruti Udyog Ltd. had already suffered service tax. Therefore, applying the principle of law established in previous judgments, the Tribunal upheld the impugned order and dismissed the Revenue's appeal, deeming it devoid of merit. The decision was based on the principle that demanding tax on an amount that had already been subject to service tax would amount to double taxation, in line with the precedents cited during the proceedings.