2009 (9) TMI 206 - AT - Service Tax

Correct value of services for service tax liability - The appellants provided free services, in respect of commercial vehicles, rendered on behalf of manufacturer - We find that the issue involved in this case is regarding inclusion of cost of the free services in respect of commercial vehicle on behalf of manufacturer - It can be noticed that even the recent circular also categorically states of Service Tax liability is only on the light motor vehicles and two-wheeler motor vehicles. - Since the earlier Circular No. 87/05I2006-S.T., dated 6-11-2006 has very clearly extracted the provisions of Motor Vehicles Act to exclude transport vehicles from the category of motor cars, we are of the considered opinion that the appellants have made out a case in their favour. - Accordingly, the impugned order is liable to be set aside and we do so and allow the appeal - In view of this, we are of the considered view that as the issue is squarely covered by our own decision in case of M/s. Focuz Motors v. Commissioner of Central Excise, Cochin, 2009 - TMI - 33499 - CESTAT BANGLORE , in favour of the assessee, we set aside the impugned order and allow the appeal.

Summary

Issues:
1. Correct value of services for service tax liability under 'Business Auxiliary Services' category.
2. Inclusion of cost of services in respect of commercial vehicles for service tax liability.

Issue 1: Correct value of services for service tax liability under 'Business Auxiliary Services' category:
The appellant contested the service tax liability concerning the correct value of services provided under the 'Business Auxiliary Services' category. The Commissioner (Appeals) upheld the Order-in-Original, stating that the services provided in respect of commercial vehicles on behalf of a specific manufacturer were chargeable under Business Auxiliary Service. The Commissioner relied on Circular No. 96/7/2007 but did not consider another relevant paragraph. In a previous Final Order, it was clarified that the service tax liability was limited to the cost of free services for light commercial vehicles. The Circular No. 87/05/2006-S.T. clarified that service tax applied to servicing/repairing of specific motor vehicles, excluding trucks. The Tribunal concluded that the appellant was not liable to pay service tax on the amount received for servicing 'light commercial vehicles' based on the Circular's provisions. The Tribunal set aside the impugned order and allowed the appeal, providing consequential relief.

Issue 2: Inclusion of cost of services in respect of commercial vehicles for service tax liability:
The issue revolved around the inclusion of the cost of services for commercial vehicles, specifically light commercial vehicles, for service tax liability. The Tribunal referred to Circular No. 87/05/2006-S.T., which clarified that service tax applied to certain motor vehicles' servicing/repairing, excluding trucks. Additionally, a Master Circular clarified that service tax liability was limited to 'light motor vehicles' and two-wheeler motor vehicles. The Tribunal emphasized that heavy vehicles like trucks were not covered under the taxable service. Considering these provisions, the Tribunal set aside the impugned order, allowing the appeal and providing any consequential relief. The decision was based on the Tribunal's previous ruling and the interpretation of relevant circulars governing service tax liabilities for different categories of motor vehicles.

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