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TMI Blog2023 (6) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... he case is principal-to-principal basis. The trade discount, incentives and commission offered by the car manufacturer M/s MSIL is in accordance with the agreement of the scheme announced by them. The Department does not dispute that there was such agreements, scheme between the appellant in the car manufacturers and the account of the appellant only reflect the actual discount allowed to them. The Department s argument is that the said discount/commission is in view of services rendered by the appellant by way of popularisation of the sales and consumption of the products by the end customer - it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A/85973/2023 - Dated:- 19-6-2023 - MR. S.K. MOHANTY, MEMBER (JUDICIAL) AND MR. M.M. PARTHIBAN, MEMBER (TECHNICAL) Shri Dharmendra Srivastava, Advocate for the Appellant Shri Prabhakar Sharma, Authorized Representative for the Respondent ORDER This appeal has been filed by M/s My Car (Pune) Private Limited, Pune (referred to as Appellants) against the Order-in-Original No. PUN-EXCUS-001PR.COM-094-15-16 dt. 19.01.2016 (referred to as impugned order) passed by the learned Principal Commissioner, Customs, Central Excise Service Tax, Pune-I Commissionerate, Pune. 2.1. Briefly stated, the facts of the case are that the appellant herein is registered with the jurisdictional Commissionerate under service tax registration No.AAECM2713MST002 for providing taxable services under the category Authorized service station , Business auxiliary service and Renting of immovable property enumerated under Section 65 (105) of the Finance Act, 1994. 2.2. The appellants are engaged in sale and purchase of motor cars of M/s. Maruti Suzuki India Ltd., (MSIL) under the brand name Maruti , since March 2007. They are also running authorised service station for Maruti v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal in its order 04.02.2015, in respect of the service tax liability on Renting of immovable properties had observed as follows: 5.1. As regards the demand of service tax on Renting of Immovable Property , we find that the appellant had discharged the service tax liability as and when the rental income were received and the details of the challans for the payments made are available. A few of these challans were produced before us. Therefore, the demand of service tax on the entire amount without giving any credit for the payments already made is incorrect in law. It is also seen that the appellants have short paid the service tax on these heads in a few years namely October 2007 to March 2008, 2008-09 and 2010-11, and they have excess paid service tax in 2009-10, 2011-12 and April 2012 to June 2012. The appellant has sought to adjust excess payment with the short payments. This is not permissible. The excess payments have to be claimed by way of refund and short payments have to be made good by the appellant to the department as principles of unjust enrichment might be involved in any refund claim. Nevertheless, the appellant has to be given due credit for the payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rdance with law. The Pr. Commissioner in his de novo proceedings had recalculated the service tax liability on Authorised Service Station , duly taking into account the total service tax payable of Rs. 2,05,90,951/- for the period 2007-2008 to 2012-2013 (Upto June, 2012) and the actual service tax paid by the appellants for an amount of Rs.1,52,88,630/- in 62 nos. of GAR-7 challans, and Rs.52,36,128/- paid through Cenvat credits and finally arrived at the amount of service tax short paid as Rs.3,77,161/-. 2.6. As regards the service tax liability on Business Auxiliary Services , this Tribunal had given the following order: 5.3. The main and the last issue pertains to demand of service tax under the category of Business Auxiliary Service. As against the total demand of Rs.1,84,53,425/- the appellant has conceded their liability on the income received under PDI charges which is Rs.4,85,94,830/-. As regards miscellaneous income of Rs.28,40,620/- the appellants claim is that this income is derived from sale of scrap and nothing to do with any service rendered. This is a verifiable fact and the appellant has to lead evidence in support of the how the income has originat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed order after giving a reasonable opportunity to the appellant of being heard . The Pr. Commissioner in his de novo proceedings had come to a conclusion that the various post sale commission/incentives paid by M/s MSIL to the appellants are towards sales promotion activity of the dealer and these were in addition to discount amount referred in the invoice of M/s MSIL. Hence, he concluded that it is not in connection with sale of vehicle by M/s MSIL to the dealer but these are relating to the further sale of vehicle or marketing/sales promotion of Maruti brand vehicles and such amounts were given on the basis of sale targets achieved by the dealer, not on the basis of their purchase from M/s MSIL. Further, he states that from the documents submitted by the appellant, the extended warranty obviously would not have been included in the assessable value of the vehicle sold by M/s MSIL to its dealers and therefore payment of central excise duty thereon does not arise. The consideration received against extended warranty service is therefore a taxable service and it should be taxed proportionately at the end of both original manufacturer and the dealer. The Principal Commission ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by them. 4. The learned Authorised Representative for the department reiterated the findings in the impugned order and stated that the appellants are liable to pay service tax and penalties adjudged in the impugned order. 5.1. We have carefully considered the submissions made by both sides. 5.2. We are prima facie of the view that this Tribunal in its earlier order dated 04.02.2015 had gone though the various issues arising in this case and gave specific directions as stated in the paragraphs 2.4. to 2.6. We find that as regards the service tax demand in respect of liability on Renting of immovable properties it is for recomputation of correct service tax demand. Similarly, in respect of service tax demanded on Authorised Service Station it is for verification of tax payments claimed by the appellant and for determining the actual service tax liable to be paid after adjusting for tax payment made by the appellants both in cash through challans and payment made through Cenvat credit by debit in Cenvat credit register. We find that this exercise was carried over in the impugned order and the recalculated amount in respect of Renting of immovable properties servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Commission Agent means any person who acts on behalf of another person and causes sale or purchase of goods, or provision or receipt of services, for a consideration, and includes any person who, while acting on behalf of another person - (i) deals with goods or services or documents of title to such goods or services; or (ii) collects payment of sale price of such goods or services; or (iii) guarantees for collection or payment for such goods or services; or (iv) undertakes any activities relating to such sale or purchase of such goods or services; (b) Excisable Goods has the meaning assigned to it in clause (d) of Section 2 of the Central Excise Act, 1994; (c) Manufacture has the meaning assigned to it in clause (f) of Section 2 of the Central Excise Act, 1944; Further, Section 65(105) (zzb) of the Finance Act, 1994 also provides for the taxable service in respect of the above service as follows: Taxable Service means any service provided or to be provided, to a client by any person in relation to business auxiliary service. The findings of the learned Principal Commissioner concludes that various incentives/commission received by the appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax. This aspect has been explained in the CBIC Circular No. 87/05/2006-ST dated 6.11.2006 as follows: Circular No. 87/05/2006-S.T., dated 6-11-2006 F. No. 137/128/2006-CX. 4 Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi *** Subject : Service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges received from the recipient of the service, therefore, such reimbursements are subject to service tax. 4. In some cases, the automobile dealers help the buyers of the vehicles for arranging the finances. For this, they have a tie-up with Banks / Non-banking Finance Companies. The customers are advised by the dealers to approach such financial companies for taking loans. The automobile dealers get commission from such financial companies for directing the customers to the latter. By this activity, the automobile dealers promote or market the services provided by their customer (i.e., the financial institution), and are therefore covered under taxable service , namely, the Business auxiliary service . The tax is payable on the gross commission received by the automobile dealer. In some cases, the dealers share part of their commission with their customers to attract them. However, this is an independent transaction between the automobile dealer and the purchaser of the vehicle, and does not involve the service rendered by the automobile dealer to the finance company. Therefore, the tax payable by the dealer would be on the gross amount received from the financial compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in a number of cases. In this connection, we refer to the decision of the Tribunal in the case of Commissioner of Service Tax, Mumbai-I Vs. Sai Service Station Limited 2014 (35) S.T.R. 625 (Tri.-Mumbai), the relevant portion of the order is extracted below: 14. In respect of the incentive on account of sales/target incentive, incentive on sale of vehicles and incentive on sale of spare parts for promoting and marketing the products of MUL, the contention is that these incentives are in the form of trade discount. The assessee respondent is the authorized dealer of car manufactured by MUL and are getting certain incentives in respect of sale target set out by the manufacturer. These targets are as per the circular issued by MUL. Hence these cannot be treated as business auxiliary service. 18. In respect of sales/target incentive, the Revenue wants to tax this activity under the category of business auxiliary service. We have gone through the circular issued by MUL which provides certain incentives in respect of cars sold by the assessee-respondent. These incentives are in the form of trade discount. In these circumstances, we find no infirmity in the adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned Chartered Accountant, we find that the dispute pertaining to discount offered to corporate customers has attained finality. In this connection, the decision of the Tribunal in re Toyota Lakozy Auto Pvt Ltd, which has referred to the other two decisions, observing that 2. Separate appeals have been preferred against two orders-in-original pertaining to the period from July, 2004 to March, 2007 and from April, 2007 to March, 2011. The demands confirmed in the two appeals are ₹ 1,58,69,430/- and ₹1,57,12,236/-; the impugned order holds appellant liable to tax on commission earned on sale of cars, on facilitation charges collected from customers for registration of vehicles and commission foregone on loans marketed by appellant to customers. It is the contention of the appellant that these are not consideration leviable to tax and that, even if these are, the adjudicating authority has erred in computing the tax liability. As the issues in the two appeals are common, we dispose both by a common order. 3. Appellant contends that ₹ 81,35,813/- and ₹ 1,21,47,133/- for the two periods has been wrongly subjected to tax because the agreement be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Furthermore, finality was accorded to tax liability by circular no.87/05/2006-ST dated 6th November 2006 of Central Board of Excise and Customs. In view of the circumstances and the stand taken by the Tribunal in these several decisions, invoking of the extended period for the purpose of imposition of penalty is not sustainable. Accordingly, the penalty imposed under section 78 of Finance Act, 1994 is also set aside. 7.1. In view of the conclusions arrived by us and on the basis of the decisions taken by the Co-ordinate benches of the Tribunal in the aforesaid cases, we conclude that the demand of service tax for an amount of Rs. 1,29,32,934/- determined in the impugned order, in respect of taxable services under the category of business auxiliary services along with interest, and penalty under Section 78 of Finance Act, 1994 fails to survive. However, the demands of service tax adjudged after re-computation of the actual tax liability in terms of the directions given by the Tribunal in its earlier order dated 04.02.2005 in respect of Renting of immovable properties services as Rs.2,37,553/- and Authorised Service Station services as Rs. 3,77,161/- in the impugned order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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