2018 (10) TMI 650 - AT - Service Tax

Valuation - Maintenance and Repair Services - inclusion of cost of spare parts, lubricants etc. in the cost of the services provided by them - Held that - Inthe case of Tanya Automobiles Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Meerut-I 2016 (1) TMI 704 - CESTAT ALLAHABAD , it was held by relying upon precedent decisions that the value of the parts used during the course of repair of the services would not represent the value of the services, so as to require their addition in the value of the services - Similarly the incentives received from Maruti Udyog for achieving targeted sale were held as not to be part of the value of the services - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Tax liability on spare parts and accessories used in maintenance and repair services.
2. Tax liability on incentives received from principal under Business Auxiliary Services category.

Analysis:
1. The appellant, an authorized dealer of Maruti Vehicles operating a service station, faced proceedings for not adding the cost of spare parts, lubricants, etc., used in maintenance and repair services to the value of services provided. The demand for Service tax of &8377; 1,64,21,070/- was confirmed. However, the Tribunal referred to precedent decisions, including Tanya Automobiles Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Meerut-I, where it was held that the value of parts used during service does not need to be added to the service value. This ruling was supported by another decision in M/s. T.M. Motors Pvt. Ltd. v. C.G.ST C & CE, Alwar. Consequently, the Tribunal set aside the order and allowed the appeal in favor of the appellant.

2. Additionally, the appellant received discounts and awards from Maruti Udyog for achieving targeted sales, which the Revenue claimed amounted to providing services under the Business Auxiliary Services category, resulting in a demand of around &8377; 30,69,692/-. However, the Tribunal found that such incentives received were not to be considered part of the value of services provided. Citing the precedent decisions mentioned earlier, the Tribunal ruled in favor of the appellant on this issue as well. Therefore, the impugned order was set aside, and the appeal was allowed by the Tribunal.