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TMI Blog2019 (10) TMI 587X X X X Extracts X X X X X X X X Extracts X X X X ..... 08 to March 2009 April 2010 to March 2011 April 2011 to September 2011 October 2011 to June 2012 Show Cause Notice 22 October 2009 13 December 2011 27 September 2012 31 March 2013 Impugned Order 24 October 2010 31 March 2011 29 July 2013 29 July 2013 Service Tax Demand Rs. 79,86,402/-- Rs. 1,00,31,399/- Rs. 48,82,097/- towards value of spare parts Rs. 85,50,873/- towards value of spare parts CENVAT CREDIT DENIED Rs. 11,10,059/- Rs. 5,17,266/- --- --- 3. The following five issues have been dealt with in the orders impugned in the aforesaid four appeals; (A) Disallowance of inadmissible Cenvat Credit of service tax availed against several activities not qualifying as input services (except in ST/60271/2013 and ST/60272/2013). (B) Inclusion of the value of spare parts/ consumables utilized during the course of provision of services in the capacity of 'Authorised Service Station' in the gross value. (C) Demand of service tax on the amount received by the Appellant against the warranty charges received by the Appellant from M/s Toyota Kirloskar TKML Motor Pvt. Ltd., on behalf of whom the Appellant is providing customer care services. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ets. The Appellant, therefore, contends that this service is directly linked to the output service of authorised service station. (ii). Learned Authorised Representative of the Department has however supported the impugned order. (iii). This issue was examined in the Appellant's own case in M/s Uttam Toyota Vs. Commissioner of Central Excise, Ghaziabad Appeal No. ST/1094/2010-CU (DB) Appeal No. ST/57/2012-CU (DB) decided by common order no. 27.12.2018. that was decided on 27 December 2018. The relevant portion of the order is reproduced below; "(a) The credit sought to be denied on the above services on the ground that these services has no nexus with manufacturing activities of the Appellant, therefore, they do not qualify as input service as per Rule 2(I) of Cenvat Credit Rules, 2004. We have seen that the credit cannot be denied to the Appellant as all these services has been availed by the appellant in the course of their business of manufacturing in terms of the decision of Hon'ble Bombay High Court in the case of Ultratech Cement Ltd. -2010 (260) ELT 369 (Bom.) wherein it was held that any service availed by the assessee during the course of their business of manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicle is not emitting pollutance beyond the prescribed limited. Thus, this is part and parcel of the service activity carried out by the Appellant and hence, an output. It is, therefore, submitted that the Appellant would be entitled to take credit on the pollution equipment that are procured from M/s AVL India Pvt. Ltd. (iii). The only reason why this Cenvat Credit been denied to the Appellant is that it was not contested in reply to the show cause notice and the invoices had also not been submitted. This is apparently incorrect because not only had the Appellant contested this issue but had also enclosed the invoices. The procurement of the pollution equipment purchased by the Appellant is essential for provision of output service and therefore, the Appellant is entitled to take the credit. 9. SMS Service Campaign (ST/59279/2013) (i). The Appellant contends that the SMS service campaign was used by the Appellant for advertisement of its Authorised Service Station and its Dealership. The Appellant claims that there is a strong competition in business as there are several service stations in each city and, therefore, the need to advertise. It is also stated that the Dealership a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds maintained by the party and produced before the Adjudicating Authority. Therefore, in deference to the judgment cited above, I am of the view that the Appellant is eligible for the amount of service tax credit and consequent refund in respect thereof. (Emphasis supplied)." (iv). In view of the aforesaid decision of the Tribunal, the Adjudicating Authority could not have denied credit only for the reason that the invoices issued by the service providers did not contain the registration number. 11. Mobile Phone Services (i). Credit for mobile phone services has been denied to the Appellant for the reason that the invoices against which credit was availed, were raised upon individual users of mobile phones (employees of the Appellant) and not the Appellant. In ST Appeal No. 9959/2013, the Adjudicating Authority has denied the credit on the ground that the said service was utilised by employees of different Departments of the Appellant not engaged in direct provision of output service. (ii). It is contended by the learned Counsel of the Appellant that Mobile Phone Services procured under the name of assessee and utilised by the employees, qualify as input service and that the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the simple reason that normally telephone or mobile is issued in the individual name but the fact is not under dispute that telephone bill bearing name of the Appellant also. Most important part is that the bill is paid by the Appellant and the same has been booked as expenditure by the Appellant, therefore, it cannot be said that the service of telecommunication has been used for business activity of the Appellant. Needless to say that business activity is export of software technology service to the foreign country, therefore, in my considered view the telephone services is input service used for output service exported, in particular, when the Revenue could not establish with any evidence that the telephone/ mobile has been used by the employee for their personal use. (vi) It will also be useful to refer to the decision of the Tribunal in Telenet System Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur 2012 (277) E.L.T. 209 (Tri. - Mumbai) and the observations are; "In the present case, it is not in dispute that the mobile phones were procured by the company and supplied to some of their functionaries/employees and that mobile phone bills were paid by the company. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s issue has been decided in the favour of the Appellant in the earlier Appeal decided by the Tribunal by order dated 27 December, 2018. (ii). The invoices pertaining to the said services which have been annexed in the paper book of ST Appeal No. 59279 of 2013 clearly show the name and address of the Appellant and the place of provision of the said service. Even otherwise, the issue has been settled in favour of the Appellant in the earlier Appeal decided on 27 December 2018. The relevant portion of the order has been reproduced above. (iii). The Appellant is therefore, clearly entitled to the Cenvat Credit. 13. Consultancy Services (i). It is contended by learned Counsel for the Appellant that the Appellant operates Dealership and Service Station from the same premises and the service was obtained by the Appellant for its entire premises including the service portion. It is, therefore, his submission that credit should be admissible as segregation of the same is not practically possible. (ii). The Adjudicating Authority has denied the credit on the ground that sufficient nexus between the input service and the output service is not there. It has also been denied on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viding this service. (ii) It is submitted that this is a sale transaction against which the Appellant has charged VAT. This would be clear from a perusal of the invoices wherein the Appellant has separately shown the value of the parts and the value of the labour charges. It also indicates the service tax paid on the labour charges. It is for this reason that it is submitted that levy of service tax on the portion attributable to spare parts sold during the service of the vehicle is bad in law and liable to be set aside. (iii) Reliance has been placed on the Circular dated 23 August 2007 issued by the Department containing a clarification that service tax is not leviable on a transaction treated as sale of goods and subject to levy of VAT. (iv) It is also submitted that issue has been decided in favour of the Appellant in the earlier Appeal decided on 27 December 2018 by placing reliance on the decision of the Allahabad High Court in Commissioner of Customs and Central Excise vs. J.P. Transformers 2014 (36) S.T.R. 961 (All.). Reliance has also been placed on the decision of the Tribunal in Singh Sales and Services vs. Commissioner of Customs, Central Excise and Sales Tax, Allaha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to commission received from banks. (D) 21. APPELLANT IS NOT LIABLE TO PAY SERVICE TAX ON COMMISSION RECEIVED FROM BANKS. (i). This demand has been confirmed under "Business Auxiliary Service". It is contended by the Appellant that it has not provided any service in the nature of "Business Auxiliary Service" to the banks. In this connection, it is pointed out that the Appellant does not have any agreement with the banks to act as their agents. They are only carrying out functions like collecting forms from the customers desirous of purchasing vehicle on loan and then forwarding the forms to the banks after getting the papers signed by the customers, for which activity some amount is paid by the banks to the Appellant. The Appellant claims that it is not doing any activity of promoting or marketing on behalf of the banks. In support of this contention reliance has been placed on a decision of the Tribunal in M/s. Ashoka Auto Sales Ltd. vs. C.C.E. & S.T., Kanpur ST Appeal No. 71867-71868 decided on 27 June 2017. (ii) It is also submitted that though the show cause notice proposed to levy service tax under "Business Auxiliary Services", but the Adjudicating Authority has con ..... X X X X Extracts X X X X X X X X Extracts X X X X
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