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TMI Blog2024 (6) TMI 1329X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of service tax, Delhi III to the appellant demanding differential service tax or Rs. 43,78,435/- under Section 73 (1) of the Finance Act, 1994 [Finance Act ] invoking extended period of limitation. Interest was demanded on this amount under section 75 of the Finance Act and a penalty of an equal amount equal to service tax demanded was proposed to be imposed under section 78. In the SCN it was also proposed to deny CENVAT credit of Rs. 1,28,80,013/- to the appellant and recover the same under rule 14 of the CENVAT Credit Rules, 2004 [CCR] along with interest and impose penalty of equal amount under rule 15(3) of CCR read with section 78 of the Finance Act. It was also proposed to impose penalty under section 77 of the Finance Act. The appellant resisted the proposals in the SCN in its written reply and during the personal hearing. However, these proposals were confirmed by the Commissioner through an order dated 25.07.2018 [impugned order]. To assail the impugned order the appellant filed this appeal. 3. We have heard the learned counsel for the appellant and the learned authorized representative appearing for the department and perused the records. 4. During the relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of invoices and documents to the Commissioner during personal hearing but the Commissioner had not considered them while passing the impugned order denying the CENVAT credit has been denied and proposed to be recovered. 7. We have gone through the impugned order and at page 53 of the order the Commissioner recorded as under: " However, at the time of personal hearing, they have submitted copies of bills/invoices against which they have availed CENVAT credit for going through the copy of bills/ invoices it is noticed that the assesse has submitted in discharge copies of bills for value. Further, in some bills/ invoices it was noticed that figures of the bills/ invoices does not match the figures provided in details on the basis of which credit has been taken, name, address and service tax registration number of the issuer of the invoices for the purpose of input services is missing/ incomplete or illegible. Some bills/ invoices have been used for taking input credit dispute of the fact that no bill/ invoices number is mentioned on these bills/ invoices and also the nature of the service mentioned in some bills/ invoices does not qualify as input services." 8. It is evident fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... herefore, demand could not have been confirmed at any head for the period April, 2011 to June, 2012. For the period after 01.07.2012, the appellant submits that any compensation received for reneging from a contract can only be considered as damages. Such amounts, being in the nature of compensation and not a consideration for service, no service tax could be charged on them. He relies on the following case laws: (i) South Eastern Coalfields Limited vs. Commissioner of C. Ex. & ST., Raipur. [2021 (55) GSTL 549 (Tri-Del.)] (ii) Krishnapatnam Port. Vo. Ltd. vs. Commissioner of C. Ex. & ST, Guntur [2023 (72) GSTL 259 (Tri.-Hyd)] (iii) Madhya Pradesh Poorva Kshetra Vidyut Vitran Co. Limited vs. Commissioner of CGST & Central Excsie, Jabalpur [2022 (67) GSTL 86 (Tri.-Del.)] 11. We have considered the impugned order and the submissions on both sides on this question. Any contract has a consideration by each side to the other. If 'A' agrees to sell his car to 'B' for an amount of 5 lakhs, 5 lakhs is the consideration which 'A' receives and car is the consideration which 'B' receives. In addition to the consideration there are various other clauses in a contract which must be compli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives received from manufacturers of automobile are trade discount and not exigible to service tax relies on the following case law: (i) Rohan Motors Ltd. vs. Commissioner of Central Excise, Dehradun [2021 (45) GSTL 315 (Tri.-Del.)] (ii) Prem Motors Pvt Ltd. vs. Commissioner of C. Ex& CGST, Jaipur [2023 (73) GSTL 97 (Tri.-Del.)]. 13. We have considered the submissions on both sides regarding the amounts received under this head. It is a well settled legal principle that any amount received by an automobile dealer from the manufacturer as trade discount including quantity discount (which is a trade discount given on the basis of volume of purchase) are not amounts received for providing any taxable service but purely discounts received on account of the trade and meeting certain sales targets. Such amounts cannot be charged to service tax and, therefore, the demand on this account needs to be set aside. Balance Written Back 14. Learned chartered accountant for the appellant submits that these amounts were received from old debtors whose bad debts were written off. After the debts were written off, the debtors, however, repaid these debts and they have been taken into account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y claim (parts). 19. We have considered these submissions and find that no service tax could have been demanded on the value of spare parts received by the appellant from manufacturer as it was only a sort of reimbursement of the cost incurred by the appellant while servicing the cars during warranty service. The demand on this account needs to be set aside. Procurement charges (Volume Discount-Paint) 20. Learned chartered accountant submits that the appellant consumes large amount of paints in servicing cars in its denting and painting jobs. The manufacturers of paints offer the appellant volume discount if it purchases large quantity of paints in a year. The amounts so received have been credited by the appellant as procurement charges (volume discount-paints). Clearly, no service tax could have been charged on this volume discount which the appellant had received from the paint manufacturers. The demand on this account needs to be dropped. 21. In view of the above, we find that the matter needs to be remanded to the Commissioner to re-determine the service tax demand as follows: (a) The invoices submitted by the appellant for CENVAT credit must be examined and if CENVAT is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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