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2020 (5) TMI 638 - AT - Service TaxBusiness Auxiliary Service - taxability of profit earned by the appellant on purchase and sale of used cars - incentives and discounts received by the appellants from M/s. Maruti Suzuki India Ltd. (M/s. MSIL) - HELD THAT - The issue is squarely covered by the decision in the case of COMMISSIONER OF SERVICE TAX, MUMBAI-I VERSUS SAI SERVICE STATION LTD 2013 (10) TMI 1155 - CESTAT MUMBAI where it was held that commission received from various bank/finances institution for arranging loan to their prospective buyers comes under the business auxiliary service. Incentives and discounts received by the appellants from M/s. Maruti Suzuki India Ltd. (M/s. MSIL) - HELD THAT - The issue is settled in favour of the appellant s themselves by this Bench relying on M/S SAI SERVICE STATION LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX 2014 (4) TMI 640 - CESTAT BANGALORE where it was held that through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee respondent. These incentives are in the form of trade discount. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Taxability of profit earned on sale/purchase of used cars by appellants. 2. Taxability of incentives and discounts received by appellants from M/s. Maruti Suzuki India Ltd. Analysis: Issue 1: Taxability of profit earned on sale/purchase of used cars by appellants: The appellants, authorized dealers of Maruti Udyog Ltd., were engaged in selling used vehicles through their True Value Division. Revenue alleged that the profit earned by the appellants on used car transactions constituted Business Auxiliary Service, leading to show-cause notices and subsequent appeals. The appellants argued that the profit margin earned on sale/purchase of used cars did not attract service tax as it involved trading activity exempt under Section 65B(44) of the Finance Act, 1994. They contended that refurbishment activities were for value addition, not a service to any party. The Tribunal, citing relevant legal provisions and precedents, upheld the appellants' arguments. The High Court of Kerala also affirmed the Tribunal's decision, emphasizing that the sale of goods is complete upon delivery and payment, not dependent on registration. The Tribunal concluded that no service element existed in the transaction, and the profit earned was not subject to service tax. Issue 2: Taxability of incentives and discounts received from M/s. Maruti Suzuki India Ltd.: Regarding the incentives and discounts received by the appellants from M/s. Maruti Suzuki India Ltd., the appellants argued that these were trade discounts, already subject to VAT, and not remuneration for services rendered. They relied on previous Tribunal decisions and legal provisions excluding purchase and sale of goods from service tax under the Finance Act, 1994. The Tribunal found in favor of the appellants, stating that the incentives were trade discounts, not liable to service tax. Citing precedents and circulars, the Tribunal held that the incentives did not fall under the category of Business Auxiliary Service. The issue was deemed settled in favor of the appellants, and the appeals were allowed with consequential relief, if any, as per law. In conclusion, the Tribunal ruled in favor of the appellants on both issues, emphasizing the non-taxability of profit earned on sale/purchase of used cars and incentives received from M/s. Maruti Suzuki India Ltd. The decisions were based on legal provisions, precedents, and a thorough analysis of the transactions involved.
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