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TMI Blog2019 (6) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... undai cars. All warranty claim repairs are undertaken by the Authorized Repairers. The cost of such repairs are incurred by the Overseas Distributors and later reimbursed by the appellant. In the case of cars cleared for home consumption, the warranty claim services are rendered by the appellants through their dealers to the car owners whereas in the case of cars exported it appeared that the Overseas Distributors rendered the warranty claim services on behalf of the appellant through the network of Authorized Repairers established and monitored by the Overseas Distributors. Though the cars are first sold to Overseas Distributors and subsequently sold to the ultimate buyers, for the limited purpose of warranty services, it appeared to the Department that the appellants continued to have the relationship of a service provider to the buyer of the car. The Overseas Distributors are contractually bound to provide such services on behalf of the appellant in as much as that as per the agreement it is their responsibility to establish and monitor the network of Authorized Repairers. 2.2 It appeared to the Department that the services rendered by the Overseas Distributors are taxable serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agraph 2 of the Show Cause Notice dated 28.03.2014 and submitted that the entire allegation as well as the demand is made on the basis that the repair and maintenance of the vehicles during the warranty period is taken care of by establishing a network of Authorized Repairers through Overseas Distributors. Thus, in essence, the demand is on the warranty repair and maintenance services rendered by the Overseas Distributors on behalf of the appellant. 3.3.2 It is the case of the Department that though the cars are first sold to Overseas Distributors and subsequently sold to ultimate buyers, for the limited purpose of warranty services, the appellants retain the relationship of service provider to the customer i.e., the buyer of the car. That Overseas Distributor is bound to provide such repair and maintenance services to the ultimate buyer on behalf of the appellant. That the said activity would fall under Sub-Clause (vi) of the definition of 'Business Auxiliary Service'. Though in the Show Cause Notice the demand is based on the warranty repair and maintenance services rendered, in the Order-in-Original the adjudicating authority has wandered into the other Sub-Clauses of the defin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicle manufactured by such manufacturer'. As per Section 65 (105) (zo) 'taxable service' means 'any service provided or to be provided to any person, by an authorized service station in relation to any service, repair, re-conditioning or restoration of motor cars, light motor vehicles or two wheeled motor vehicle in any manner.' 3.5.2 From the above provisions of law, it can be seen that the appointment of Overseas Distributors for carrying out repairs and maintenance during the warranty period is nothing but Authorized Service Station service. The Board Circular No. B2/1/2000-TRU dated 09.07.2001 vide paragraph 2 states that any service or repair provided by an Authorized Service Station in relation to motor cars and two-wheeled motor would be covered under the ambit of Service Tax. The examples of services would include services provided under warranty period, subsequent services such as routine check of engine, vehicle, engine oil check, gas oil check, wheel alignment, etc., or any repair undertaken as such. All these services were brought under Authorized Service Station service by the Ministry vide Circular No. 87/05/2006-ST dated 06.11.2006 This Circular was in force until 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is actually performed being outside India, the demand of tax post 01.07.2012 cannot sustain. 3.8 Arguments were advanced on the ground of invocation of extended period of limitation coupled with revenue neutrality. It is submitted by the Ld. Counsel for the appellant that part of the demand is hit by limitation. The demand is raised under reverse charge mechanism and even if the Service Tax is paid, the appellant as a service recipient would be eligible to avail credit of the Service Tax paid. Thus, the whole situation is a revenue neutral one. In such a scenario, the extended period of limitation cannot be invoked since the appellant cannot be saddled with intention to evade payment of Service Tax. 3.9 Ld. Counsel for the appellant also submitted that the appellant had put forward various other pleas such as the amount paid to Overseas Distributors, being in the nature of reimbursement of expenses, is not subject to levy of Service Tax, and also the plea of Commission Agent, etc., before the adjudicating authority. However, such pleas are given up at this stage of the Tribunal. He prayed that the appeals may be allowed. 4.1 On behalf of the Department, Ld. AR Shri. K. Veerabha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they will, without charge, either repair or replace the defective parts within a given time-limit and under certain circumstances. Since availability of adequate and quality warranty is one of the factors that determines the buyer's purchase decisions, only on being reassured of a proper safeguard in the form of a foolproof warranty in place will a buyer proceed with purchasing a product. 4.4 Ld. AR further submitted that the services rendered by the Authorized Repairers to the Overseas Distributor, in terms of contractual liabilities between the two, in the form of repairs and/or maintenance works undertaken, is not a subject matter of the appeal at all. The instant proceedings are not concerned with the transactions that transpire between the Authorized Repairer and the Overseas Distributor since the said transactions are between two independent commercial entities situated overseas which are also extra-jurisdictional in nature. The Department has been contending from the outset that there is also a service being rendered by the Overseas Distributor to the appellant (situated in India) on reverse charge basis, which is liable to Service Tax and which should not be lost sight of. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is stated that as per the agreements entered into between M/s. Hyundai Motor Corporation, Korea and the Overseas Distributors, the said Overseas Distributors are responsible for handling the warranty claims, monitoring of repair and maintenance services and the establishment of an entire network of Authorized Repairers for Hyundai cars. Thus, the appellant sells the cars to the Overseas Distributors who in turn sell it to the ultimate consumers. 6.2 All the cars have attached warranty conditions for repair and maintenance. The Overseas Distributors carry out the warranty claims through Authorized Repairers. The expenses incurred by the Authorized Repairers are paid by the Overseas Distributors. The appellant then reimburses the amount incurred by the Overseas Distributors. The chain of transaction can be represented diagrammatically as under : 6.3 From the Annexures to the Show Cause Notice it is seen that the demand is raised on the labour charges for services paid by the appellant to the Overseas Distributors. The appellant being the manufacturer is liable to oblige the warranty claim for which the amount is paid to Overseas Distributors who provide the repair services on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Department, highlights Sub-Clause (vi) of the definition so as to allege that the Overseas Distributors are providing service of warranty repairs on behalf of the appellant and therefore, the activity would fall within the definition of Business Auxiliary Service. However, at the time of adjudication, the Original Authority in paragraph 13.1 has observed that the Overseas Distributors are mandated to promote and market the sale of cars and such sales promotion and marketing is also an activity that falls within the definition of Business Auxiliary Service. In paragraph 13.2, the adjudicating authority has observed that provision of service on behalf of the client, including customer care services, are rendered by the Overseas Distributors and such activity also falls within the definition of Business Auxiliary Service. 8.1 After analyzing the arguments put forward by both sides and perusing the records, we do not find that the appellants had paid any incentives to the Overseas Distributors for sales promotion and marketing. The entire demand is on the amount paid by the appellant to the Overseas Distributors for the warranty claims. The adjudicating authority is of the opin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... would be eligible to avail credit of the same. Thus, the situation is wholly a revenue neutral one. The extended period of limitation cannot be invoked alleging intention to evade payment of Service Tax when the entire transaction amounts to a revenue neutral situation. 9.3 The Hon'ble jurisdictional High Court in the case of Commissioner of C.Ex., Chennai-IV Vs. M/s. Tenneco RC India Pvt. Ltd. reported in 2015 (323) E.L.T. 299 (Mad.) had relied upon the decision of the Hon'ble Apex Court in M/s. Nirlon Ltd. Vs. Commissioner of C.Ex., Mumbai reported in 2015 (320) E.L.T. 22 (S.C.) to hold that when the situation is a revenue neutral one, the allegation that the assessee has wilfully suppressed facts with intention to evade duty cannot sustain. 10. For the reasons discussed above, we hold that the demand raised invoking the extended period of limitation cannot sustain and requires to be set aside, which we hereby do. 11. Now let us address the demand for the period post 01.07.2012. The Ld. Counsel for the appellant has drawn our attention to the introduction of Place of Provision of Service Rules, 2012. On perusing the impugned order, it is seen that the adjudicating authority ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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