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2020 (1) TMI 96 - AT - Central ExciseNature of transaction - service or not - liability of service tax or VAT - handling/ logistic charges recovered from the customers for providing service of safe handling and cleaning of cars till the delivery to the customers - allegation that Appellant had not paid service tax from 1 July 2010 to 31 July 2015, even though the handling/ logistic charges are covered under the taxable service - non-consideration of decision in the case of AUTOMOTIVE MANUFACTURERS PRIVATE LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, NAGPUR [2015 (2) TMI 972 - CESTAT MUMBAI] which is claimed by appellant to be squarely applicable to the present case - whether the Appellant is required to pay VAT under the provision of the VAT Act towards the collection handling/logistic charges or whether the Appellant is required to pay service tax under the Finance Act? HELD THAT:- Section 2 (36) of the VAT Act defines a sale price means the amount paid or payable to a dealer as consideration for the sale of any goods, less any sum allowed by way of any kind of discount or rebate according to the practice normally prevailing in the trade, but inclusive of any statutory levy or any sum charged for anything done by the dealer in respect of the goods or services rendered at the time of or before the delivery thereof, except the tax imposed under this Act. A Division Bench of the Mumbai Tribunal in AUTOMOTIVE MANUFACTURERS PRIVATE LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, NAGPUR [2015 (2) TMI 972 - CESTAT MUMBAI] examined whether handling charges collected by the Appellant therein for bringing parts and components from the warehouse/ depot of Maruti Udyog Ltd to the service station could be subjected to service tax. It was observed that service tax could not be levied on such charges since they form part of the value of goods sold - The Tribunal also held that ‘handling charges’ were incurred in connection with the procurement of the goods and are included in the value of goods sold and VAT liability has to be discharged by including the cost of the handling charges. Thus, any consideration received for supply of goods would not be covered within the scope of section 66 of the Finance Act. On a consideration of the factual position before the Mumbai Tribunal in Automative Manufacturers and the present Appeal, it would be seen that they are basically the same. Thus, the decision of the Tribunal in Automative Manufacturers (P.) Ltd would conclude the controversy in favour of the Appellant. Automative Manufacturers (P) Ltd. were collecting handling for the parts procured from the warehouse, while the Appellant is charging handling cost for the charges incurred in bringing the vehicles from the warehouse to the showroom. The sale invoices in both the cases include in the said charges. What needs to be noted is that though the Appellant had specifically referred to the decision of the Tribunal in Automative Manufacturers Ltd, both before the Joint Commissioner as also before the Commissioner (Appeals), yet neither the Joint Commissioner nor the Commissioner (Appeals) have made any reference to this decision. This decision, which has a great bearing on the controversy, should have been noticed and in case, the Joint Commissioner or the Commissioner (Appeals) thought that it was not applicable, should have distinguished. However, these decisions have not even been considered by the Joint Commissioner or the Commissioner (Appeals). Appeal allowed - decided in favor of appellant.
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