2018 (2) TMI 574 - AT - Service Tax

Valuation - whether the commission from insurance companies and from financial institutions would form part of the assessable of the service being provided by them or not? - Held that - the issue stands decided against them by various decisions of the Tribunal and as such they are not contesting the same. Whether the discounts extended by the manufacturing companies would be liable to service tax by including same in the value of the services? - Held that - the appellant have not contested the demands on the ground of commissions received from insurance companies and financial institutions. As such the quantification of their liability to pay service tax is required to be done by the Original Adjudicating Authority. Penalty - Held that - the said issue was the subject matter of various litigations before various forums and as such was not free from doubt thus not justifying imposition of any penalty upon the appellant. Appeal allowed by way of remand.

Summary

Issues involved:
1. Whether commissions from insurance companies and financial institutions form part of the assessable service for authorized dealers of motor companies.
2. Whether discounts offered by manufacturing companies are liable to service tax for authorized dealers of motor companies.

Analysis:

Issue 1: Commissions from insurance companies and financial institutions
The appeals in question revolve around the assessability of commissions received by M/s JMK Motors and M/s Sahney Brothers, authorized dealers of Tata Motors Ltd. and TVS Motors, respectively, from insurance companies and financial institutions. The central dispute is whether these commissions should be included in the assessable value of the services provided by the dealers. The appellant does not contest the liability to pay service tax on these commissions, leaving the quantification of the tax liability to the Original Adjudicating Authority. Notably, the Tribunal finds that the issue of commissions has been subject to various litigations across different forums, indicating ambiguity and justifying the setting aside of any penalties imposed on the appellants.

Issue 2: Discounts offered by manufacturing companies
The second issue pertains to whether discounts extended by manufacturing companies should be considered for service tax liability by the authorized dealers. The appellant relies on a Tribunal decision in the case of My Car Pvt. Ltd., which held that such discounts are not taxable. The Revenue argues that the Lower Authorities did not consider this aspect and requests a remand for fresh consideration in light of the My Car Pvt. Ltd. decision. The Tribunal acknowledges the relevance of the My Car Pvt. Ltd. decision and decides to remand the appeals for re-quantification by the Original Adjudicating Authority, which will also re-decide the issue of discounts in line with the Tribunal's decision.

In conclusion, the Tribunal's common order addresses the identical issues in the appeals of M/s JMK Motors and M/s Sahney Brothers, providing clarity on the assessability of commissions from insurance companies and financial institutions and the tax treatment of discounts offered by manufacturing companies for authorized dealers of motor companies. The decision emphasizes the need for consistent application of legal principles and precedents in determining service tax liabilities for such transactions.