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TMI Blog2024 (1) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... valuation when no such consideration is received from the customers for providing services during warranty period. It is not the case of the department that the Appellant though received value of the services but the same could not be quantified or ascertained, hence resort to the method of valuation becomes necessary. It is a case of non-receipt of any consideration for the service rendered - Since no consideration has been received the service provided by the appellant during the warranty period, hence confirmation of service tax under the taxable service of Management, Maintenance or Repair cannot be sustained. Compensation received by the appellant from the OEMs during the relevant period on the defective parts replaced by them from their stock warehouse on the advice of the service engineers during the course of repair of equipment during the warranty period - HELD THAT:- The issue is no more res integra and covered by the judgement of this Tribunal in the case of M/S. T.A.F.E ACCESS LTD. VERSUS COMMISSIONER OF GST CENTRAL EXCISE, COIMBATORE [ 2023 (5) TMI 1154 - CESTAT CHENNAI ]. In the said case, the Tribunal, following the principle laid by the Hon ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 67 of the Finance Act, 1994 equivalent to spare parts value, replaced free of cost. On adjudication, demands have been confirmed with interest and penalty was imposed. Hence, these appeals. 3.1. Learned advocate for the appellant, at the outset, has submitted that during the periods in dispute, they have discharged service tax in respect of AMC service; however, no service tax was paid for services rendered during the warranty period of the sold equipment as no consideration was received. In respect of AMC service, the appellant upto July 2012 paid service tax on the entire value charged to the customers and availed cenvat credit on inputs and input services used in such AMC services. From 01.07.2012, they paid service tax on the gross-value in terms of Rule 2A of the Service Tax Valuation Rules and not availed cenvat credit on the duty paid spares / inputs used in providing such services. Also, the Department has been raising periodical demands on the indent commission received by the appellant for the warranty services provided to foreign entities from March 2005 to September 2014 under BAS and MMR service. The first show-cause notice was issued to them on 30.09.2011 for providin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o House (P) Ltd. Vs. CCE, Jaipur [2009(13) STR 190 (Tri. Del.)] 3.4 Further he has submitted that the provisions of Section 67 read with Rule 3 of the Service Tax Valuation rules does not provide for determination of value in case of free service / service provided without consideration. It is his contention that since the warranty service is provided free, no value can be attributable to the service in terms of Section 67 of the Finance Act, 1994. Assailing the findings recorded in the impugned order, which holds that if the consideration is not ascertainable, then recourse is to be made to Section 67(4) read with the Valuation Rules, he has submitted that Section 67(4) of the Finance Act lays down that value shall be determined in the prescribed manner i.e. according to Rule 3 of Service Tax (Determination of Value) Rules, 2006. It is his contention that when Section 67 does not provide for determination of value in the absence of consideration, the learned Commissioner erred in applying the said rule in confirming the demands. In support, he referred to the judgment of the Hon ble Supreme Court in the case of CST Vs. Bhayana Builders (P) Ltd. [2018(10) GSTL 118 (SC)]. It is his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on cannot be invoked as the appellant has not suppressed any material facts with intent to evade payment of tax. Therefore, the demand for the period in the first show-cause notice is barred by limitation. Further he has submitted that the second show-cause notice issued for the extended period is contrary to the principles of law laid by the Hon ble Supreme Court in the case of Nizam Sugar Factory Vs. CCE [2006(197) ELT 465 (SC)]; hence bad in law. It is further submitted that there has been no delay on their part in submitting the data; it was demanded on 27.03.2013 and they submitted it on 22.07.2013. 4. The Learned Authorised Representative (AR) for the Revenue reiterated the findings of the learned Commissioner. 5. Heard both sides and perused the records. 6. The short issue involved in the present appeal for determination is whether: i. Service tax is payable by the appellant for providing services to the customers during warranty period through third party arrangement under the taxable category of Management, Maintenance or Repair Service ; ii. Applicability of service tax on compensation received from OEMs on replacement of defective parts under Management, Maintenance or R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erms of Rule 3 ibid, based on the cost of such spares used in providing warranty support services and the credit availed thereon and the value of all services of the third party engaged in providing warranty support services and details of service tax credit availed thereon as furnished by M/s. HP India vide their letter dt. 22.07.2013., the service tax liability totally amounting to Rs.80,36,71,458/- (inclusive of cess) for the period from April 2008 to March 2013 at the rates specified under Section 66 of the Finance Act, 1994 and Section 66B of the Finance Act, 2012 (w.e.f. 01.07.2012) as envisaged under Section 68(1) ibid, has been worked out. Accordingly, in view of the aforesaid facts, I hold that M/s. HP India are liable to pay the service tax totally amounting to Rs.80,36,71,458/- (inclusive of cess) on the warranty support service, classifiable under Management Maintenance and Repair Service rendered by them during the period from April 2008 to 30.06.2012 and as service under Section 65B(44) for the period from 01.07.2012 to March 2013. I also hold that they are liable to pay interest at applicable rates under Section 75 of the Finance Act, 1994, on the amount of Rs.80,36, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , not only, in relation to another, reveal a provider , but also the flow of consideration for rendering of the service. In the absence of any of these two elements, taxability under section 66B of Finance Act, 1994 will not arise. It is clear that there is no consideration insofar as corporate guarantee issued by respondent on behalf of their subsidiary companies is concerned. 9. The reliance placed by Learned Authorised Representative on the non-monetary benefits which may, if at all, be of relevance for determination of assessable value under section 67 of Finance Act, 1994 does not extend to ascertainment of service as defined in section 65B(44) of Finance Act, 1994. Consideration is the recompense for the contractual undertaking that authorizes levy while assessable value is a determination for computing the measure of the levy and the latter must follow the former. 7. The above would suggest that this was a case where the assessee had not received any consideration while providing corporate guarantee to its group companies. No effort was made on behalf of the Revenue to assail the above finding or to demonstrate that issuance of corporate guarantee to group companies without ..... X X X X Extracts X X X X X X X X Extracts X X X X
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