2023 (2) TMI 234 - AT - Service Tax

False declaration filed under Voluntary Compliance Encouragement Scheme [VCES], 2013 - it is alleged that the declaration was substantially false as the actual taxable receipts were Rs. 22,41,50,211/- on which a tax of Rs. 2,49,65,525/- was to be paid - was the appellant liable to pay service tax on various incentives, which it received from Tata as per the dealership agreement? - was the appellant was liable to pay service tax on the entire receipts from M/s Tata Motors on account of the warranty services including that of suppliers? - false declaration or not - levy of penalty under section 78.

Tax on various incentives - HELD THAT:- The appellant has not disputed and has already paid service tax on various incentives, which it received from Tata as per the dealership agreement.

Warranty services including that of suppliers - HELD THAT:- The demand on the warranty receipts part of the demand has already been dropped by the Commissioner in the impugned order. Part of the demand has been confirmed because the appellant was not able to give separately the receipts on account of supplies and consumables and labour receipts. The appellant has now submitted these details before us. There is no dispute regarding the taxability itself with respect to this part of the demand.

Demand on the incentives received by the appellant from Tata Motors for meeting sales targets - HELD THAT:- It is undisputed that the agreement is titled dealership agreement and that it also clarifies that the appellant has to purchase vehicles from Tata Motors and then sell them. If it meets the targets it gets additional incentives. This in our considered view, is in the form of a trade discount. Trade discount can take many forms, such as, cash discount, quantity discount, year end discount, etc. These incentives are in the form of year end discount. This is an incentive given to encourage the dealer to buy and sell larger number of vehicles. It is not a payment for any service rendered to the manufacturer. In market, buyers who purchase larger quantities of any good often get a better price. The incentives in this case are of this nature. It has already been held by this Tribunal in the case of Sai Service Station Ltd. [2013 (10) TMI 1155 - CESTAT MUMBAI] and Rohan Motors Ltd. [2020 (12) TMI 1014 - CESTAT NEW DELHI], that such incentives are not exigible to service tax - thus, the demand on the incentives received by the appellant are not exigible to service tax.

It is found that of the Rs. 23,43,19,543/- on which service tax has been demanded, no service tax can be charged on Rs. 17,17,75,363/- and service tax has already been declared and paid on Rs. 2,33,48,828/-. Of the remaining Rs. 3,91,95,353/- part of the demand has already been dropped as the receipts were of prior to 2012. For the period 2012 to 2013 part of the services were rendered between 01.04.2012 to 30.06.2012 which are not taxable, but services post 01.07.2012 were taxable. However, the demand was confirmed for the entire year as the breakup of the receipts between 01.04.2012 to 30.06.2012 and the period from 01.07.2012 to 31.03.2013 were not available. These figures have now been presented before us by the learned Consultant. According to the learned Consultant on the basis of these figures a demand of Rs. 15,44,404/- as service tax deserves to be dropped. As the Commissioner had no opportunity to examine these figures and the relevant documents we find that it is a fit case to be remanded to the Commissioner for verification of these figures.

Appeal allowed by way of remand.