2023 (10) TMI 813 - AT - Service Tax

Levy of Service Tax - Appellant is an authorized dealer of Tata Motors - Sales and other incentives - Hire purchase commission - Repossession charges received by the Appellant credited under 'other charges' in the profit loss account - Job work charges - Freight received from customers/Tata Motors. Sales and other incentives - HELD THAT - The incentive or discount or commission received from the banks and institutions does not lead to the conclusion that the Appellant provided service to them. At the most, it may be in the nature of business support service which is not the case made out in the SCN. Accordingly, Service Tax is not payable on commission received from bank/financial institution. Hire purchase commission - HELD THAT - Such charges are being received from the buyers of vehicles for assisting in registration/insurance etc. of the vehicles which is an essential requirement under the Motor Vehicle Act and the said receipts are not chargeable to Service Tax. Repossession charges received by the Appellant credited under 'other charges' in the profit loss account - HELD THAT - Demand not tenable as they are received from the owners of the vehicle, whose vehicles are repossessed by the financiers and for safekeeping are entrusted to the Appellant. For such service or parking, the Appellant received an amount from the vehicle owners which is not taxable under BAS. Further, these receipts are on principle to principle basis and on that score also are not liable to Service Tax. Job work charges - HELD THAT - The learned Commissioner has himself held that the same is not taxable under BAS but under Authorized Service Station charge, which was not the case made out in SCN and as such the demand of service tax on these charges is not tenable. Further, the receipt for service of commercial vehicle is not taxable under the category of 'Authorized Service Station'. Freight received from customers/Tata Motors - HELD THAT - The essential ingredient of GTA, (that issuance of consignment notes was not done by the Appellant) thus, the same cannot be made liable to Service Tax as a GTA. Accordingly, no Service Tax is payable on this score also. The impugned order set aside - appeal allowed.

Summary

Issues Involved:

1. Taxability of sales and other incentives received from Tata Motors Ltd.
2. Commission received from banks and financial institutions.
3. Hire purchase commission/other charges.
4. Repossession charges.
5. Job work charges.
6. Freight earned from Tata Motors Ltd.

Summary of Judgment:

1. Sales and Other Incentives:
The Tribunal held that the sales and other incentives received by the Appellant from Tata Motors Ltd. are in the nature of trading receipts received as trade discounts. Therefore, these incentives do not involve any element of service and are not taxable under the Service Tax provisions.

2. Commission from Banks and Financial Institutions:
The Tribunal found that the relationship between the Appellant and the banks/financial institutions is on a 'Principle to Principle basis'. The Appellant and the financial institutions are promoting each other's business without any specific activity by the Appellant that promotes the business of the banks and institutions. Thus, the commission received does not constitute a taxable service under Business Auxiliary Service (BAS). At most, it may be considered a business support service, which was not the case made out in the Show Cause Notice (SCN).

3. Hire Purchase Commission/Other Charges:
The Tribunal held that the charges received from buyers of vehicles for assisting in registration and insurance are essential requirements under the Motor Vehicle Act and do not constitute a taxable service. These charges are not for promoting any third party's business and hence are not chargeable to Service Tax.

4. Repossession Charges:
The Tribunal concluded that repossession charges received from vehicle owners, whose vehicles are repossessed by financiers and kept in the Appellant's yard, are not taxable under BAS. These charges are in the nature of parking fees and are received on a principle-to-principle basis, thus not liable to Service Tax.

5. Job Work Charges:
The Tribunal noted that the learned Commissioner had held that job work charges are not taxable under BAS but under Authorized Service Station charge, which was not the case made out in the SCN. Additionally, the service of commercial vehicles is not taxable under the category of 'Authorized Service Station'. Therefore, the demand for service tax on these charges is not tenable.

6. Freight Earned:
The Tribunal held that the essential ingredient of Goods Transport Agency (GTA) service, which includes the issuance of consignment notes, was not met by the Appellant. Therefore, the freight received from customers/Tata Motors is not liable to Service Tax as a GTA.

Conclusion:
The Tribunal allowed the appeal on merits and set aside the impugned order, granting the Appellant consequential benefits in accordance with the law.