9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (4) TMI 66 - AT - Service TaxClassification of service - Business Support Services (BSS) or not - services in relation to providing vehicles to associates, in course of its business activities - Business Auxiliary Services (BAS) or not - business promotion activities provided/rendered in the course of business activities - Authorised Service Station services or not - services involved in servicing of vehicles during the free warranty period provided/rendered during the course of its business activities - CENVAT Credit - method adopted by the appellants assessee by foregoing certain amount of Cenvat credit in respect of provision of exempted service is correct in terms of provisions of Rule 6(3A) of CCR, 2004 or not - penalty is imposable u/s 77, 78/76 of FA - period of dispute in this case relates to 01.04.2011 to 30.06.2017. Levy of service tax in respect of services provided in relation to business promotion activities in course of appellant s business activities - HELD THAT - The facts of the case need to be examined along with the legal position in respect of levy on payment of service tax. From the facts of the case, it is found that the various schemes under which the discount/incentives were received by the appellants from the manufacturer of motor vehicles by way of credit notes, were essentially in the nature of schemes conceptualized by such manufacturer wherein the discount given to the ultimate consumer is borne by both the manufacturer and the appellants dealer. As per such schemes, the appellants had forwarded to the manufacturer the proposal of discount to be given to the ultimate consumer, for their consideration and approval - The discounts offered in the above manner by issue of credit note also amount to reduction in purchase price of the individual vehicles which are covered during the aforesaid volume/value of sales. In respect of reimbursements scheme, various discounts offered depending on the specific model of the vehicles being sold during a particular specified period, the appellants dealer extends such benefits to all eligible buyers of the vehicles. Hence, the said benefit of discount for incentives/ reimbursable amounts also results in reduction of net sale price of vehicles to the ultimate consumer. In the case of RELIANCE ADA GROUP PVT LTD VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI-IV 2016 (3) TMI 810 - CESTAT MUMBAI , the Tribunal has held that cost sharing arrangement in common services/activity as per agreed arrangement among them cannot be subjected to service tax. CBIC has vide its circular No. 87/05/2006-ST dated 06.11.2006 has also clarified on the service tax issues relating to authorized motor vehicle dealers and service stations, which have also been discussed elaborately in the case of M/S MY CAR (PUNE) PVT. LTD. VERSUS CCE, PUNE-I 2016 (1) TMI 1155 - CESTAT MUMBAI , wherein the Tribunal has observed that the discount/commission/incentives given for sale of cars, is no way comparable to services provided to customers at free of charge for which reimbursement charges are given by the car manufacturer - the Tribunal have held that the incentives/ commission is solely related to trade discounts for sale of cars in accordance with the regular practice as well as the agreement/schemes that were in vogue in the industry, and these cannot be treated as compensation received by the appellant for any services provided to the car manufacturer. Levy of service tax - Business Support services - services in relation to providing vehicles to associates, in course of its business activities - HELD THAT - The learned Commissioner had concluded that the nature of activity of supplying vehicle to the goods transport agency, by the appellants is squarely covered by the ambit of the exemption notification No.25/2012 ST dated 20.06.2012 and by agreeing to the points submitted by the appellants, learned Commissioner had held that the said service cannot be categorized/classified under the head Business Support Services . As there is no grievance expressed by the appellants in the appeals filed, on this issue as it is not against them and there is no appeal filed by the Revenue against the dropping of the demand on this issue, there is no need to deal with the above issue. Levy of service tax - Authorised Service Station services - Free services provided during the warranty period - HELD THAT - The issue had also been decided by the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE, PUNE-I VERSUS SAI SERVICE STATION LTD 2017 (5) TMI 1144 - CESTAT MUMBAI , by setting aside the service tax demand it was held that the issue is no more res integra as identical issue came up before the Tribunal in the case of COMMISSIONER OF CENTRAL EXCISE CUSTOMS, NASHIK VERSUS M/S AUTOMOTIVE MANUFACTURES LTD 2015 (12) TMI 549 - CESTAT MUMBAI wherein the Tribunal held that service tax liability cannot be on the part of margin given by the manufacturer to the dealers being inclusive of the charges of free sale service. Reversal of Cenvat credit in terms of Rule 6(3A) of Cenvat Credit Rules, 2004 - HELD THAT - It is found from records of the case, in particular from the Final Audit Report No.236/2016-17 submitted by the Deputy Commissioner, Service Tax Audit-III, Mumbai, it has been specifically mentioned that the during the course of audit, the Audit wing had observed that the appellants had maintained CENVAT registers as per Service Tax registrations obtained for various premises. The Audit wing had also observed that the appellants had not availed Cenvat credit on inputs services which have been utilized only for exempted services; however, Cenvat credit has been availed common input services within each of the registered location. It is also explained by the appellants that they had not obtained service tax registration in respect of two premises, since no service is rendered in these places and they only undertake trading of vehicles for which they are discharging appropriate VAT before the jurisdictional Sales Tax Authorities - in the present case, neither there is any cursory examination of the same nor any specific findings recorded by the learned Commissioner in the impugned order. In the absence of clear finding for demand of reversal of Cenvat credit and for demand of service tax on other income without examination of documents, it is found that the same cannot be legally sustainable. There are no merits in the impugned order dated 13.10.2020, insofar as the adjudged demands were confirmed on the appellants, holding the activity as taxable services. Consequently, the demands of service tax and imposition of penalties confirmed in the impugned order dated 13.10.2020 is not legally sustainable. Appeal allowed.
Issues Involved:
1. Classification of services provided in relation to vehicles to associates. 2. Taxability of services related to business promotion activities. 3. Taxability of services for free warranty vehicle servicing. 4. Correctness of the method adopted for foregoing Cenvat credit. 5. Imposition of penalty u/s 77 and 78/76 of the Finance Act, 1994. Summary: 1. Classification of Services Provided in Relation to Vehicles to Associates: The Tribunal upheld the Commissioner's decision that the nature of activity of supplying vehicles to the Goods Transport Agency (GTA) by the appellants is covered by the exemption notification No. 25/2012-ST dated 20.06.2012 and cannot be categorized under 'Business Support Services' (BSS). 2. Taxability of Services Related to Business Promotion Activities: The Tribunal examined the facts and legal provisions and concluded that the confirmation of demand for services provided in relation to business promotion activities was not legally sustainable. The Tribunal noted that the discounts/incentives received by the appellants from the manufacturers were essentially in the nature of trade discounts, reducing the net sale price of the vehicles to the ultimate consumer. The Tribunal distinguished the present case from the cases relied upon by the Commissioner, such as Tata Motors Ltd. and HDFC Bank Ltd., and held that the incentives offered by the manufacturer to their dealer cannot be treated as Business Auxiliary Service (BAS). 3. Taxability of Services for Free Warranty Vehicle Servicing: The Tribunal referred to the case of Commissioner of Central Excise, Pune-I vs. Sai Service Station Ltd. and concluded that the service tax liability cannot be imposed on the free warranty services provided by the appellants, as the value of such services is embedded in the selling price of the vehicles. 4. Correctness of the Method Adopted for Foregoing Cenvat Credit: The Tribunal found that the appellants had maintained Cenvat registers as per their Service Tax registrations and had not availed Cenvat credit on input services utilized only for exempted services. The appellants had also reversed the Cenvat credit on input services availed at locations where both service of vehicles and sale of spare parts were carried out. The Tribunal noted the lack of clear findings and evidential documents in the impugned order to support the demand for reversal of Cenvat credit and service tax on 'other income.' 5. Imposition of Penalty u/s 77 and 78/76 of the Finance Act, 1994: The Tribunal found no merit in the imposition of penalties as confirmed in the impugned order. The Tribunal held that the adjudged demands and penalties were not legally sustainable and set aside the impugned order to the extent of the confirmed demands and penalties. Conclusion: The Tribunal allowed the appeals in favor of the appellants, setting aside the impugned order dated 13.10.2020, and held that the adjudged demands of service tax and imposition of penalties were not legally sustainable.
|
