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TMI Blog2016 (3) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... ective parts will have to be rendered by a dealer of the respondent. That service will be provided only if and when such defect exists in a car. Should the need for such replacement arise, it would be only then that the service intended for use by the client comes into play. Mere coverage by the extended warranty scheme does not, of itself, create an intention to use the service of the dealer. Therefore, no liability of tax arises under Business Auxiliary Services on money received towards extended warranty. - Decided against the department - Appeal No.ST/543/2012 - Final Order No. ST/A/53950/2015-CU(DB) - Dated:- 30-10-2015 - G RAGHURAM, PRESIDENT AND CJ MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri Amresh Jain, DR For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice dated 18th April 2011 was that the purchasers of cars were the clients of M/s Honda SIEL and, when requiring goods or services for defects during the duration of the extended warranty, relied upon M/s Honda SIEL to procure for them these goods and services; thus M/s Honda SIEL are liable to tax in the category of 'business auxiliary services.' Commissioner of Central Excise, Large Taxpayers Unit (LTU) Delhi, vide order-in-original no. 28/Commr/2012 dated 10th January 2012, dropped proceedings against M/s Honda SIEL. Revenue is in appeal against the impugned order. 3. Learned Authorized Representative contends that M/s Honda SIEL was in receipt of ₹ 35,60,73,194/- between October 2005 and September 2010 towards Exten ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear that the sufficiently wide specifications in section 65(19) prompts such efforts. It is claimed on the one hand that the client is the recipient of services which are procured by the respondent and on the other that the business auxiliary service is provided to the dealers by the respondent. An attempt has also been made to define service -otiose, considering that each of the taxable service has its own definitional framework. A try at re-classification of the service in these proceedings by requiring this Tribunal to decide upon the infirmity of the impugned order in not confirming the demand under section 65(105)(zzo) has also been inserted; as the show cause notice did not invoke this course of action, it is moot whether the course o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no enhancement of business or increase arising from the extended warranty scheme; such enhancement arises from defects in the cars. 10. The respondent is an automobile manufacturer and it does not require genius to conclude that the credibility of a manufacturing enterprise is not built upon defective production. A manufacturer of repute would endeavour to eliminate or, at least, minimize the probability of defects. Customers who have purchased automobiles are not likely to be interested in owning cars that are potentially defective. Replacement of defectives are not happy anticipations. They are in the nature of low probability risks which are attempted to be mitigated through the extended warranty scheme. Cars are not likely to be popu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the scheme is, by definition, a continuation of the standard warranty scheme available to the buyer of the motor vehicle. It would be absurd to accord it a tax treatment incongruent with that accorded to the standard warranty merely because of the existence of a consideration for extended warranty. Service under both the standard and extended warranty may acquire the status of a taxable event when the contingency provided for in the warranty scheme - standard or extended - arises. The finding of the adjudicating authority that a taxable event has not occurred cannot therefore be wished away. 13. Revenue has cited section 65(19)(vi) as the service which best describes the extended warranty scheme the consideration for which is sought t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but need not necessarily be considered a professional in rendering other services. And that explains the reason for a dealer network of professionals to render that in which the manufacturer is deficient. The definition of 'business auxiliary service' supra is accordingly not amenable to describe the purchaser in relation to the respondent. 15. From the above, it would appear that the context in which the service becomes taxable is that of an intermediary who arranges goods or services for further business activity; the use of the words 'inputs' and 'client' as well as the explanation appended would make it appear to be so. Without delving further into that aspect, it is clear from the above that the procurement o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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