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2018 (11) TMI 1469 - AT - Service TaxValuation - inclusion of amount reimbursed from the manufacturers for the services done during warranty period in assessable value - period from April, 2004 to March, 2009 and April, 2009 to March, 2010 - Held that - The issue involved in this case is no more res integra as the same has already been considered and laid to rest by the decision of CESTAT, Chennai in the case of M/s. Shiva Automobiles Pvt. Ltd. Vs. Commissioner of Central Excise, Coimbatore 2018 (5) TMI 677 - CESTAT CHENNAI , where it was held that the cost of spare parts cannot be included for purposes of levy of service tax - appeal allowed - decided in favor of appellant.
Issues:
Service tax liability on reimbursements for warranty services provided by the appellant. Analysis: The appellant, an authorized dealer of Motor Cycles, provided warranty services for the manufacturer. The expenses incurred for these services were reimbursed by the manufacturer. Show Cause Notices were issued for non-payment of service tax on these reimbursements for the period from April 2004 to March 2009 and April 2009 to March 2010. The lower adjudicating authority confirmed the demands, along with interest and penalties. The appellant appealed to the Commissioner of Customs, Central Excise & Service Tax, who upheld the orders. The appellant then appealed to the CESTAT Chennai. During the hearing, the appellant's advocate cited a previous decision by CESTAT Chennai in a similar case, ruling in favor of the appellant. The Revenue supported the findings of the lower authorities. The CESTAT Chennai bench reviewed the previous decision and found that the demand for service tax on the cost of spare parts used in warranty services was not justified. The bench ruled that the cost of spare parts sold with VAT cannot be included for service tax levy. Additionally, amounts recovered as extended warranty premiums were not considered reimbursements for spare parts and were not liable for service tax. The bench set aside the demand for service tax based on these findings. Since there were no changes in the facts of the current case, and the Revenue failed to produce any contrary judgments, the CESTAT Chennai bench applied the previous ruling to the present case. The bench found the impugned order unsustainable and set it aside, allowing the appeals with consequential benefits as per the law.
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