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2018 (6) TMI 1430 - AT - Service TaxLiability of Service Tax - incentives received from M/s Hyundai Motors India Ltd. (HMIL) and pre-delivery inspection (PDI) Charges - Held that - The incentives are in the form of trade discounts to the appellants and hence cannot be termed as any provision of service rendered by the Appellants to M/s. HMIL. Hence there is no reason to demand service tax on the said incentive amount - demand set aside. PDI charges - Held that - The pre-delivery inspection is conducted by the dealer on his own in respect of vehicles purchased from HMIL, while handing over the vehicles to their customers - It is undisputed that the appellant has not received any separate amount from the manufacturer / customer for the same and the cost is incurred out of their profit margin earned on trading of the vehicles. As the value of the same is already included in the value of vehicles sold, no service tax is leviable on the cost of the PDI Charges - demand set aside. Appeal allowed - decided in favor of appellant.
Issues:
Appeal against service tax demand on incentives received from a manufacturer and pre-delivery inspection charges. Analysis: The appeals were filed against an Order-In-Appeal upholding service tax demand on incentives received from a manufacturer and pre-delivery inspection charges. The appellant contended that the incentives were trade discounts not liable for service tax, supported by agreements with the manufacturer. The Tribunal referred to past judgments to support this argument, emphasizing that incentives were not for services rendered. Regarding pre-delivery inspection charges, the appellant argued that it was part of the margin given by the manufacturer and not received from customers, hence not subject to service tax. The Tribunal agreed, citing previous cases where similar demands were set aside due to the nature of the charges being included in the vehicle's selling price. Consequently, the service tax demand and penalty were deemed unsustainable, and the impugned order was set aside, allowing the appeal.
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