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2024 (11) TMI 128 - AT - Service TaxService taxable under 'Business Auxiliary Service' - Incentives received by the appellant on the quantum of sale of vehicles during the relevant period amounts to service - whether the service tax confirmed on the said amount under the service category of 'Business Auxiliary Service' is tenable? - AR submits that it is evident that the activities of the appellant amounts to service and liable to pay service tax under the category of Business Auxiliary Services . HELD THAT - Tribunal in identical cases have already held that the said incentives are in no way a consideration for providing any service and cannot be liable for service tax under 'Business Auxiliary service'. See M/s SK Cars (India) Ltd. 2023 (6) TMI 243 - CESTAT CHENNAI , M/s Audi Motors Pvt. Ltd. 2023 (4) TMI 1369 - CESTAT NEW DELHI M/s Jubilant Motor Works (South) Pvt. Ltd. 2024 (2) TMI 819 - CESTAT CHENNAI We find that the issue is no more res integra, since the issue is squarely covered by the decisions of the Tribunal and the activity cannot be considered as a service provided by the appellant to M/s MSIL. We do not find any reason to differ with the decisions of the Tribunal and following the decisions of the Tribunal, the appeal filed by the M/s AVG Motors is allowed with consequential relief, if any as per law. Consequently, the appeal filed by the Revenue is dismissed.
Issues:
1. Whether the incentives received by the appellant on the sale of vehicles amount to a service taxable under 'Business Auxiliary Service'? 2. Whether the discounts received by the appellant from the manufacturer are trade discounts or commission for services rendered? Analysis: 1. The case involved the appellant, an authorized dealer of a manufacturer, receiving incentives for promoting and marketing vehicles. The issue was whether these incentives constituted a service taxable under 'Business Auxiliary Service.' The Department alleged the incentives were akin to commission for promotion, marketing, and sale of goods, falling under the service category. The Commissioner confirmed the demand, leading to the appeal before the Tribunal. 2. The subsequent issue arose when the Adjudicating Authority confirmed a demand for a later period. The Appellate Authority, in the impugned order, held that the discounts received by the appellant were trade discounts related to the sale of vehicles, not payment for services rendered. The discounts were given on a principal-to-principal basis, not as an agent of the manufacturer. The Commissioner (Appeals) allowed the appeals, leading to a further appeal by the Revenue. 3. During the hearing, the appellant's counsel argued that the activities with the manufacturer were on a principal-to-principal basis, not that of a service provider. The incentives were part of the sale consideration on which Excise duty and CST/VAT were paid, making them ineligible for service tax. Various legal precedents were cited to support the argument of the mutual exclusivity of sales tax and service tax. 4. The counsel contended that the incentives were for promoting the appellant's own sales, not as commission from the manufacturer. It was emphasized that the incentives were not consideration for services. Legal decisions and a circular were cited to support the appellant's position. 5. The counsel further argued that the incentives had been consistently held as not liable for service tax in similar cases by various Tribunal benches. Citing specific cases, it was asserted that the incentives did not constitute consideration for services and were not taxable under 'Business Auxiliary Service.' 6. The Revenue's Authorized Representative argued that the appellant's activities fell under the definition of 'Business Auxiliary Services' as per the Finance Act, making them liable for service tax. However, the Tribunal, after considering the arguments from both sides, found the issue to be settled by previous decisions. The Tribunal agreed with the appellant's position, allowing the appeal and dismissing the Revenue's appeal. This detailed analysis of the judgment highlights the key issues, arguments presented, legal precedents cited, and the final decision reached by the Tribunal.
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