2017 (5) TMI 1144 - AT - Service Tax

Free after-sale services rendered to the customers - taxability - Held that - the issue is no more res integra as identical issue came up before the Tribunal in the case of CCE v. Automotive Manufacturers 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 dealer as being inclusive of the charges of free sale service - demand rightly dropped - appeal dismissed - decided against Revenue.

Summary

Issues:
Revenue's appeal against order-in-appeal setting aside service tax liability on free after-sale services.

Analysis:
The appeal was filed by Revenue challenging the order-in-appeal dated 21.12.2012, which set aside the demand of service tax liability on the consideration for free after-sale services provided by the respondent. The first appellate authority considered Section 65(8) of the Finance Act, 1994, along with a CBEC letter and various case laws. The authority concluded that service tax liability does not arise on pre-delivery inspection charges and free after-sale services. Revenue contended that the cost of these services is included in the maximum price of vehicles and constitutes the margin received by the respondent from customers. However, the Tribunal noted that a similar issue had been addressed in previous cases. In the case of CCE v. Automotive Manufacturers Ltd., the Tribunal held that service tax liability cannot be imposed on the margin given by the manufacturer to the dealer. The Tribunal also referred to the case of My Car Pvt. Ltd., where the demand on a similar issue was set aside. The first appellate authority relied on these decisions, leading to the Tribunal finding no merit in Revenue's appeal.

The Tribunal found that the issue had been settled in favor of the respondent based on previous decisions and upheld the impugned order as correct and legal. The appeal by Revenue was rejected, affirming the decision of the first appellate authority.