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TMI Blog2024 (8) TMI 204X X X X Extracts X X X X X X X X Extracts X X X X ..... In this context as well, we observe that receipt of logistics/handling charges is naturally bundled with sale of cars since majority of similar service providers in the industry would receive the said amounts. Service tax is not leviable on logistics/handling charges, since sale of cars is covered under the exclusion part of service definition given under section 65B (44) of Finance Act, 1994 i.e. transfer of title in goods. Consequently, they will obviously form part of the value of the goods when they are subsequently sold and consequently sales tax/VAT would apply and not service tax. CBEC vide its Circular No. 699/15/2003-CX., dated 5-3-2003 clarified that it is envisaged appears that any activity of sales dealer at the pre-sale stage or at the time of sale will not come under the purview of service tax. This circular has clearly clarified that such pre-sale charges are not leviable to service tax, and the logistics/handling activities are all pre-sale activities and hence are not leviable to service tax. The Tribunal in INDIAN OIL CORPORATION LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, GOA [ 2015 (1) TMI 456 - CESTAT MUMBAI] held that whatever expenses have been incurred befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 65(B) of the Finance Act, 1994 and since it is not included in the value of cars sold, service tax is leviable on the same. The original adjudicating authority also held that though penalty under section 78 of the Finance Act and Section 70 of the Act read-with rule 7 and 4A of the Service Tax rules, 1994 are not applicable, penalty under section 77 of the Finance Act, 1994 is applicable in the case since the entire demand and the interest is not paid by the appellant before the issuance of the show cause notice. The adjudicating authority held that 97% of the tax was voluntarily paid before the issuance of the show cause notice and therefore, the appellant is eligible for reduce confirmed as penalty under section 76 of the Finance Act, and imposed only 5% of the demand confirmed as penalty amounting to Rs. 1,00,585/-with an option to pay penalty reduced to 25% if paid within one month of the receipt of the order. 2.3 The Department filed a review appeal before the Commissioner (Appeals) who, vide the impugned order imposed mandatory penalty under section 78 of the Finance Act. The present appeal is filed against the said impugned order-in appeal. 3. We have heard the Learned Aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant had deposited the entire demand of service tax (almost 97% and 3% left out due to calculation mistake. In addition, it is pleaded that even if any demand was to be confirmed, it should have been restricted to normal period of one year as the adjudicating authority had observed in para 15 of the OIO that there is no mens-rea involved in the case. The fact that two audit teams had also visited the appellant is also acknowledged by the adjudicating authority, consequently, the demand should have been restricted to normal period. 4.2 Further, it has been submitted that the normal penalty imposed under section 76 was paid by the appellant in the anticipation that the entire proceeding will culminate in its entirely by paying of another Rs.25,000/- in addition to the amount already paid by them. In view of the above, they have prayed for setting aside the impugned order. 5. Learned Authorized Representative for the Department submitted that the case was booked by DGCEI and investigation revealed that the appellant has not paid service tax on the logistic charges. Subsequently they paid the service tax of Rs. 20,11,690/- for the period 2012-13 to 2015-16(up to 25.01.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period), we note that the Tribunal in CCE v. Seva Automotives Private Limited [2007 (7) STR 276 (Mum-Trib)] held that in view of the finding of the lower appellate authority that handling charges are in relation to sale and not in relation to any services provided by the respondents and further, prima facie, the revenue has not been able to show that the handling charges on which the Service tax has been demanded by the adjudicating authority is in the nature of repair charges liable to Service tax . Similarly in Automotive Manufacturers Private Ltd v. CCE [2015-TIOL-390 CESTAT-MUM] the Tribunal held Therefore, we do not understand how service tax levy would apply especially when the goods are subject to sales tax/VAT on a value inclusive of handling charges. In view of the above decisions, it cannot be held that handling charges are not exigible to service tax. 9. Post 01.07.2012, in order to qualify as a service , the activity has to satisfy three limbs of the definition of service viz., there has to be a service provided by a provider to a recipient, there has to be a monetary consideration and the service has to be provided in the taxable territory of India. Logistics/Handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the case of the Department that the Appellants had not deposited service tax on such logistic charges. The learned Commissioner has held that the Appellants have charged the logistics charges over and above the ex-showroom price of car. If logistic charges were part of the transaction value, then it could have been included in the sale value and mentioned in the sale invoice but Appellants had separately charged logistic charges and issued separate invoice in this regard. It has therefore been held that it is a pure service taxable under the provisions of Finance Act, 1994 and these logistics charges are not the part of transaction/sale value, rather logistics charges are the amount charged from the customers in view of services related to logistics charges. Appellants have submitted that they have collected logistics charges as part of transaction value at the time of sale of vehicle. These charges are part of sale invoice and VAT is collected on the same. They also submitted that there can be no service till the goods are sold to another person. 16. We have perused the copy of invoice for sale of car as well as invoice for logistic charges. Both these invoices have been raised ..... X X X X Extracts X X X X X X X X Extracts X X X X
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