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TMI Blog2007 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... de free after sales service to the customers by charging only the material cost and not labour charges. Shri Amalendu Chakraborty, ld. Consultant appearing for the appellants states that it is an admitted fact that Tata Motors does not reimburse the cost of free after sales service provided by the appellants in respect of cars sold by them. He states that the Ministry issued a Circular No. 62/11/2003, dated 21-8-2003 under which it was clarified that if the value of service provided free of charges is zero, the tax will also be zero even though the service is taxable. He further states that under Circular No. 28/2006-Cus. (sic) (Circular No. 87/05/2006-S.T.), dated 6-11-2006, it was clarified as under : "3. As regards 'free servicing&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .) = 2007 (78) RLT 532 (CESTAT-Ban.) which has held that the service tax is not leviable when sales tax has been paid. He further points out that the Bangalore Bench has relied on an observation of the Hon'ble Supreme Court in the case of M/s. Gujarat Ambuja Cements Ltd. v. UOI - 2006 (3) S.T.R. 608 (S.C.) = 2005 (67) RLT 469 (S.C.), which reads as under: "This mutual exclusivity which has been reflected in Article 246(1) means that taxing entries must be construed so as to maintain exclusivity. Although generally speaking, a liberal interpretation must be given to taxing entries. This would not bring within its purview a tax on subject matter which a fair reading of the entry does not cover. If in substance the statute is not referabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the sale value of the cars from the customers and the entire amount has been subjected to sales tax by the concerned State Government authorities. When the appellants sold the cars and recovered the amount including the dealers' margin, the dominant intent, was to sale the goods, namely, cars and not to provide free after sales service. In our view, the entire amount including the dealers' margin has been rightly taxed to sales tax representing the value of the cars. The provision of free servicing is merely incidental and intended to promote the sale of the cars. Hence, we are of the view that no service tax can be levied on the amount representing the dealers' margin or any part of it which already has been subjected to sales ..... X X X X Extracts X X X X X X X X Extracts X X X X
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