2024 (4) TMI 1232 - AT - Service Tax

Levy of service tax - incentives linked to the sale of motor vehicles - sale of accessories and spare parts by the Appellant to its co-dealers and customers - amount received against sale of goods during the servicing-of vehicles (both periodical or accidental) - supply of goods involved in execution of works - activity performed by the Appellant by way of painting of vehicles - HELD THAT - The issue is no more res integra and has already been decided in favour of the Appellant in their own case 2018 (10) TMI 650 - CESTAT ALLAHABAD where it was held that Reference can be made to this Bench s decision in the case of Tanya Automobiles Pvt. Ltd. v. Commissioner of Central Excise Service Tax Meerut-I 2016 (1) TMI 704 -CESTAT ALLAHABAD wherein 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. Conclusion - The service tax demands on incentives sale of goods and services were not legally sustainable. Appeal allowed.

Summary

The present appeal before the Appellate Tribunal, CESTAT Allahabad, involves the challenge to an Order-In-Original passed by the Commissioner, CGST, Noida. The Appellant, a private limited company, is an authorized dealer of M/s Maruti Suzuki India Limited (MSIL) for selling Maruti passenger cars and spare parts. The Appellant receives incentives linked to the sale of motor vehicles and also provides services as an authorized service station for MSIL vehicles. The dispute primarily revolves around the service tax demands raised by the Department on various transactions conducted by the Appellant.Issues Presented and Considered:1. Whether the service tax demands on incentives received by the Appellant and the sale of goods and services are legally sustainable?2. Whether the Appellant's activities fall within the purview of the Finance Act, 1994?3. Whether the service tax demand on the supply of goods involved in the execution of works is constitutional?4. Whether the service tax demand on the painting of vehicles is legally sustainable?Issue-wise Detailed Analysis:The Tribunal considered the legal framework, precedents, evidence, and arguments presented by both parties. The Appellant argued that the demands on incentives, sale of goods, and services were incorrect as they did not provide services to MSIL. They also contended that the sale of accessories and spare parts constituted pure sales of goods outside the Finance Act, 1994. Additionally, the Appellant disputed the service tax demands related to servicing vehicles and the painting of vehicles as works contracts.The Departmental Representative defended the impugned order and argued for its dismissal based on lack of merit. However, the Tribunal noted that a previous decision in the Appellant's favor had already addressed similar issues, citing precedents where the Tribunal ruled that the value of spare parts used in services and incentives received from principals did not constitute taxable services.Significant Holdings:The Tribunal found that the issues raised in the present appeal were already decided in favor of the Appellant in a previous case. Citing relevant precedents, the Tribunal concluded that the impugned order could not be sustained. Therefore, the appeal filed by the Appellant was allowed, and the impugned order was set aside with consequential relief.In summary, the Tribunal ruled in favor of the Appellant, holding that the service tax demands on incentives, sale of goods, and services were not legally sustainable based on established precedents and legal principles. The decision emphasized the importance of consistency in applying tax laws and respecting prior rulings in similar cases.