2018 (7) TMI 29 - AT - Service Tax

Business Auxiliary Services - Consideration received towards promotion and marketing of the vehicles manufactured by MUL, which was accounted by the appellant in their books of accounts as miscellaneous income - principal to principal relationship - whether the consideration received would be liable to be taxed under the head Business Auxiliary Services? - Held that - The discounts/incentives received by the appellant from MUL cannot be made liable for payment of Service Tax under BAS, since the appellant is purchasing the cars from MUL on principal to principal basis and subsequently, reselling the same. Demand of Service Tax under various receipts recorded under miscellaneous income - loading/unloading charges - Pollution Check-up charges - penalty-cum processing charges etc. - commission amounts received from ICICI - Held that - It is obvious that these amounts have been received not towards provision of any service on behalf of MUL or anybody else. Consequently, there is no justification for levying Service Tax under BAS - In miscellaneous income, commission amounts received from ICICI have also been included. This commission has been received for provision of furniture to ICICI for facilitation of accommodating representatives in the premises of the appellant for selling insurance policies for cars. Such an activity cannot be considered under BAS - demand set aside. GTA Service - appellant has paid the freight expenses in connection with transportation of Cars to their customers - liability of service tax - Held that - Appellant have not issued any consignment notes which are necessary to identify the appellant as a goods transport agency - in the absence of consignment notes, the activity of the appellant cannot be classified under GTA service - demand set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the amounts received by the appellant from M/s. Maruti Udyog Ltd. are liable for payment of Service Tax under Business Auxiliary Service (BAS)?
- Whether the demand made under the category of Goods Transport Agency (GTA) for freight expenses paid by the appellant is justified?
- Whether the incentives received from ICICI for providing space in the appellant's premises are chargeable to Service Tax under BAS?

Analysis:

1. Service Tax under BAS for amounts received from M/s. Maruti Udyog Ltd.:
The appellant received various incentives, discounts, and bonuses from MUL, which were accounted for as 'miscellaneous income.' The Department contended that these amounts were consideration for promoting and marketing MUL's vehicles, thus liable for Service Tax under BAS. The appellant argued that they purchased cars on a principal-to-principal basis from MUL and resold them, emphasizing that the incentives were not for providing a service. Citing precedents, including Commercial Auto Dehradun Pvt. Ltd. and Yash Motors, the appellant challenged the imposition of Service Tax under BAS. The Tribunal, following the decision in Tyota Lakozy Auto Pvt. Ltd., held that the discounts and incentives received on vehicle procurement were not taxable under BAS, as the transactions were in the nature of sale, not service.

2. Demand under GTA for freight expenses:
The Department also raised a demand under GTA for freight expenses incurred by the appellant in transporting cars to customers. The appellant argued that they were not a goods transport agency as they did not issue consignment notes. Relying on the decision in South Eastern Coal Fields Ltd., the Tribunal ruled that in the absence of consignment notes, the appellant's activity could not be classified under GTA service, thus setting aside the demand under this category.

3. Incentives from ICICI for providing space:
The appellant received incentives from ICICI for providing space to facilitate ICICI employees in processing loans from their premises. The appellant contended that this activity did not fall under BAS, citing the decision in Pagariya Auto Centre. The Tribunal agreed, setting aside the demand for Service Tax on the commission received for providing space to ICICI representatives.

In conclusion, the Tribunal set aside the demands of Service Tax in both impugned orders, ruling in favor of the appellant based on the nature of transactions, precedents, and the absence of consignment notes in the transportation activity.