2007 (11) TMI 236 - AT - Service Tax

Authorized Service Station - appellants render three free services for every vehicle sold - since no amounts are collected from any person towards the services rendered by them as an authorized service station the tax demanded from them is not sustainable - no tax can be levied on them on account of free services - appellants have already paid tax & cess demanded - balance dues are towards penalty & interest yet to be quantified - waiver of pre-deposit and stay of recovery of the dues granted

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery of interest and penalties under the Finance Act, 1994 for services rendered by the appellants as an Authorized Service Station.

Analysis:
The case involved an application by M/s. Pillai & Sons Motor Company seeking waiver of pre-deposit and stay of recovery of interest and penalties imposed on them for not paying service tax on charges collected from buyers for services rendered as per an agreement with M/s. Maruti Udyog Ltd. The appellants contended that since they did not receive any consideration for the first three services rendered for each vehicle sold, the tax demanded was not sustainable. The JDR referred to a Board's Circular supporting the levy of service tax on the impugned services.

The Member (T) carefully considered the submissions and acknowledged the appellants' argument that no consideration was received for the free services rendered. The Member noted that the appellants had already paid the tax and cess demanded, with the remaining dues being towards penalty and interest. Consequently, the Member granted a complete waiver of pre-deposit and stay of recovery of the dues as per the impugned order.

In conclusion, the judgment favored the appellants by granting a waiver of pre-deposit and stay of recovery of interest and penalties imposed under the Finance Act, 1994 for services rendered by them as an Authorized Service Station. The decision was based on the appellants' argument regarding the absence of consideration received for the free services and the fact that they had already paid the tax and cess demanded.