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TMI Blog2024 (10) TMI 901X X X X Extracts X X X X X X X X Extracts X X X X ..... consequently no service tax is payable. Even for the period post negative list regime in the Finance Act, 1944, the sale of goods by way of transfer of title of goods is excluded from the service. The Division bench of this Tribunal dealing with the identical issue in the case of INFINIUM MOTORS GUJ PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [ 2022 (11) TMI 948 - CESTAT AHMEDABAD] held that it is not in dispute about the transaction even in the present case being identical and sales incentive given by M/s Toyota Kirloskar Motors Pvt Ltd to the appellant is nothing but in connection with purchase and sale of the vehicles. Hence, the same can not be considered as commission against any service by any stretch of imagination. - Thus, it is settled that the trade incentive/ discount is not liable to service tax. Thus, in the present case, the amount of trade discount is not liable to service tax. Hence, the impugned order is set aside, the appeal is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant on merits as well as limitation were discarded by the Ld. Adjudicating Authority vide the following findings : - • That the assessees have received incentives in respect of promoting or marketing the sale of vehicles or business of TML under various incentive schemes. • The activity performed by the assessees for which they received incentives, the act of performing a specific activity or achieving a specified target, achieving a target for network development and the activity of sales promotion, marketing of sales of goods of client is covered under the definition of service. • The incentives/commissioner are excludible from the taxable value of service only when such expenses are paid to the third party and service provider is actually working as a pure agent. However, in the instant case said incentives / commissions are kept by the assessees and not passed on, as no documentary evidence in this regard had been produced. 1.5 The Appellants being aggrieved by the aforesaid orders confirming demand of service tax had challenged the same in appeal before Ld. Commissioner (Appeals). However, the Ld. Commissioner (Appeals) had also confirmed the demands ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives have been extended by TML as a reduction in price from the value of goods supplied by TML, wherein the nexus of "incentive" is with goods purchased by the Appellant and not with any activity undertaken by the Appellant for TML. 2.3 To appreciate the above submission, it is imperative to refer to the applicable law, as envisaged by the legislature, and as interpreted by the judiciary. 2.4 The regime of Service Tax as introduced initially in 1994, was a classification- based taxation regime. This meant that Service Tax was only required to be paid in a case where the services provided were classifiable under a category enumerated under the Finance Act. However, the Finance Bill 2012, w.e.f. 01.07.2012, introduced a new system of taxation of services, popularly known as "Negative List Regime". Thenew changes were a paradigm shift from the system existed hitherto. Under the old system, only services of specified descriptions were subjected to the levy of tax. In thenew system, all services, regardless of nomenclature or description, became taxable except for a small set of services falling under the "Negative List". Under the new regime, Section 66B of the Finance Act (as amend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated for a variety of reasons including that of separation of powers between the Centre and the States whereby the power to impose tax on sale of goods, whether by mere transfer of title or by way of deemed sale, has been reposed in the states. The relevant exclusion from the definition of "service" is reproduced as under: "a. A transfer of title in goods or immovable property, by way of sale, gift or in any other manner." 2.6 It is evident from the above that the activity of transfer of title in goods or immovable property in any manner has been excluded from the definition of "service". Thus, the value attributable to transfer of title in goods in any manner shall not be chargeable to Service Tax, as the activity, towards which the same is paid, shall not qualify as a "service". 2.7 In the above background, it is reiterated that the subject incentives/discounts received by the Appellant from TML cannot be said to be a consideration for any service allegedly rendered by the Appellant as there is no nexus between the impugned activities allegedly carried out by the Appellant and the alleged "consideration" received in the form of discount or incentive from TML. Moreover, only b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Motors Pvt. Ltd. vs. Commissioner of Service Tax, Mumbai- II, 2018 (6) TMI 1430 - CESTAT Mumbai, • My Car Pvt. Ltd. vs. Commissioner of Central Excise, Kanpur, 2015 (40) S.T.R. 1018 (Tri. - Del.), • Rohan Motors Limited vs. CCE, Meerut, 2018 (7) TMI 29 - CESTAT New Delhi • Rohan Motors Limited vs. Commissioner of Central Excise, 2020 (12) TMI 1014 - CESTAT New Delhi • Anand Motor Agencies Ltd. vs. Commissioner of Customs, 2022 (2) TMI 546 - CESTATAllahabad • M/s GD Goenka Pvt. Ltd. V. Commissioner of CGST, Delhi South, 2023-VIL-798-CESTAT-DEL-ST • M/s. Krishi Upan Mandi Samiti v. CCE & ST, Jaipur I & Jaipur II, 2017 (5) TMI 1465- CESTAT NEW DELHI • M/s. Airport Authority of India v. CST, Delhi, 2017 (3) TMI 938- CESTAT NEW DELHI. • Infinium Motors Gujarat Pvt. Ltd, v. CST, Ahmedabad 2022 (11) TMI 948-CESTAT AHMEDABAD • M/s. Prem Motors Pvt. Ltd. v. CCE & CGST, Jaipur 2023 (2) TMI 990- CESTAT NEW DELHI • Reliable Automotive Pvt. Ltd. v. CGST & CE, Mumbai 2024 (4) TMI 66- CESTAT-Mum • BM Autolink v. CCE- Kutch (Gandhidham) 2022 (12) TMI 12 - CESTAT AHMEDABAD • M/s. Roshan Motors Pvt. Ltd. v. CCE, Cus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) a transaction in money or actionable claim;" From a bare perusal of the above definition of "Service", it is clear that for any transaction to qualify as a service, the ingredient such as their must be an activity, such activity must be carried out by one present for another, such activity must be carried out for a consideration and such activity includes a declared service. As per the definition of service given above, none of the ingredient is satisfied in the case of sale of goods, for this reason, the activity of transfer of a title in the goods by way of sale is excluded from the purview of the service tax. Therefore, the taxing on sale of goods is within the jurisdiction of the State as per the Constitution on which State VAT is payable. Therefore, the trade discount/ incentive given by the car manufacturer M/s. TATA Motors Ltd in the present case to the appellant is during the course of sale of goods. Hence, the same is not leviable to service tax. This issue has been considered in the following judgment:- a) The Division bench of this Tribunal dealing with the identical issue in the case of Infinium Motors Gujarat Pvt. Ltd (supra) held as under:- "5.3 The second is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved that this issue had been raised earlier also in the appellant"s own case by the department, wherein the Commissioner (Appeals) has passed an Order having Order-in-Appeal No. AHM-SVTAX 000-APP-66-16-16-17 dated 11.08.2016 and decided the issue of sales incentives in the favour of the appellant. This case was remanded by the CESTAT vide Order No. S/1063/WZB/AHD/2011 and M/1318/WZB/AHD/2011 dated 27.07.2011 wherein this Tribunal directed the Commissioner (Appeals) to set aside the demand of service tax on sales incentives if the appellant proves that incentive / discount was received for trading or buying and selling. The Commissioner (Appeals) held that the appellant had purchased the cars from M/s. Toyota Kirloskar Motor Pvt. Ltd. on their own account on payment of VAT and sold to the clients on payment of VAT. The Commissioner (Appeals) also held that the transaction was principal to principal basis and the service tax was not payable under the category of BAS. From the above, it is not in dispute about the transaction even in the present case being identical and sales incentive given by M/s Toyota Kirloskar Motors Pvt Ltd to the appellant is nothing but in connection with pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on such account cannot, therefore, be treated as consideration for any service. The incentives received by the appellant cannot, therefore, be leviable to service tax." • Prabhakar Marotrao Thaokar & Sons V/s. CCE, Nagpur-2019 (20) G.S.T.L 294 (Tri.-Mum.) "4. On careful consideration of the submissions made by both the sides and on perusal of records. We find that as per the agreement particularly the following clause: "5. The Wholesale Distributor shall sale the goods at the price as determined by the Manufacturer. It shall not charge anything extra over and above the said price. The Manufacturers shall not be responsible for any loss of goods after it leaves the factory premises. Wholesale Distributor would be the owner of the goods once same are supplied to them by the manufacturer from the factory gate and the Wholesale Distributor shall take possession of the goods from the factory gate and shall transport the same to its godowns at its own expenses." It is observed from the above para that after supply of goods by the manufacturer the ownership of goods is transferred to the wholesale distributor who is the appellant here. The sales invoice raised by the m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of trading activity in terms of Rule 6(3) of Cenvat Credit Rules, 2004, on the ground that the appellant have availed Cenvat credit in respect of common input service, which is used for their taxable services as well as exempted services namely "trading activity" of the vehicles, spare parts etc,. Consequently, Rule 6(3) was invoked according to which when an assessee avails the Cenvat credit on common input service used in taxable and exempted services, he has to pay 5%/6%/7% as applicable from time to time. In this regard we find that the demand on this count was raised for the period from 2007-08 to 2012-13. As per provision of Cenvat Credit Rule 6 it has application in case the assessee is providing taxable and exempted service. The trading activity in respect of which the demand was raised under Rule 6(3) under a fiction of law made exempted service only with effect from 01.04.2011 by insertion of explanation under Rule 2(e) by notification No. 3/2011-CE(NT) dated 01.03.2011. In view of this amendment it is clear that the trading activity was not defined as exempted service prior to 01.04.2011. Therefore, the trading activity not being an exempted service during period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the disputed period i.e. 1-4- 2010 to 31-3-2011. 4. The Learned Consultant representing the respondent, however, argued that trading has been included as an exempted service specifically vide the notification referred above. The notification cannot be held to be having retrospective effect and consequently he prayed that the impugned order may be sustained. He also brought to our notice that the Department also had earlier taken the stand to this effect vide Commissioner (Appeals) order No. 34/2013, dated 5-2-2013. 5. Heard both the sides and perused record. The respondent has carried out, during the disputed period, the taxable service of authorized service station. They also carried out, from the same premises, the activity of trading of four wheelers. They have availed Cenvat credit of various input services which the Department has claimed has been utilized both for the taxable service as well as trading. The stand taken by the Department is that the activity of trading is to be considered as exempted service even though such activity has been specifically inserted as an exempted service only w.e.f. 1-4-2011 vide Notification No. 13/2011-C.E. (N.T.). 6. Both the auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In this case, since the dispute is up to the period of 2009-2010, the amended definition of exempted service would not be applicable. Thus, the embargo credit in Rule 6(3) of the Rules does not have any application for taking of Cenvat credit on the activities concerning provision of taxable service and trading activity. Hence, denial of Cenvat credit by the authorities below, in my opinion, is not in conformity with the statutory mandates. Therefore, I do not find any merits in the impugned order and allow the appeal in favour of the appellant." • CCE, Ghaziabad V/s. Avon International P. Ltd.-2017 (5) GSTL 376 (Tri.-All.) "The present two appeals are arising out of same impugned Order-in- Appeal No. GZB-EXCUS-000-APP-11-14-15, dated 28- 4-2014. Therefore, they are taken together for decision. Appeal No. E/54591/2014 is filed by M/s. Avon International Pvt. Ltd. and Appeal No. E/53649/2014 is filed by Commissioner of Central Excise, Ghaziabad. M/s. Avon International Pvt. Ltd. have submitted compliance to interim order No. 05/2016, dated 27-1- 2016. 2. The brief facts of the case are that appellant-manufacturer was issued with show cause notice dated 28-3-2013 wherein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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