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2023 (10) TMI 355 - AT - Service TaxLevy of service tax - Auto Mobile Parts used during service of motor vehicle in authorized service station - handling charges billed and collected by the respondent from their customer of the motor vehicle in the same bill of motor vehicle - spare parts were sold by the appellant and required VAT was paid - Board Circular No.96/7/2007-ST dated 23.08.2007 - HELD THAT:- From the clarification, it is absolutely clear that even during the course of servicing of the vehicle, if any spare part is used and the same is shown as sale of the goods and VAT is paid no service can be demanded on the same. The revenue in the appeal misinterpreted the said clarification by considering part of the portion of the clarification in second Para thereof that any goods used in the course of providing services are to be treated as inputs and used for providing the service and accordingly cost of such inputs to be included. Considered the third Para of the clarification according to which where spare parts are used by service station for servicing of vehicles. Service tax should levied on the entire bill including the value of the spare parts raised by the service provider namely service stations. The revenue in their appeal taken the above clarification in isolation as the same is applicable only in such cases where any assessee is providing the service of authorized service stations and in the bill service charges and cost of spares are shown and a consolidated bill of service is raised. In the present case even though the consolidated bill was raised but they have shown separate portion of service and spare parts and in the portion of spare parts, it is clearly shown as a sale of goods and VAT was paid. Therefore, even by considering the above board circular according to Para1 of the clarification, It is clear that when the spare parts was sold and VAT was paid no service tax can be charged thereon. Similarly, in the case of handling charges the same is included in the sale value of the sale of the vehicle and on total value the VAT was paid. Therefore, the handling charges are nothing but incidental to the sale of the goods and the same is part and partial of sale value of the vehicle on which VAT was paid. Therefore, no service tax can be charged on handling charges. The issue related to the spare parts as well as the handling charges have been considered in INFINIUM MOTORS GUJ PVT LTD VERSUS C.S.T. -SERVICE TAX - AHMEDABAD [2022 (11) TMI 948 - CESTAT AHMEDABAD] where it was held that Moreover, in some of the judgments, even the fact that one common invoice was issued showing both service part and sale of spare parts with payment of VAT/sales tax, is absolutely same. In view of the above judgments, issue involved in the present case is squarely covered. Hence, the demand of Service Tax on the value of spare parts and lubricants is not sustainable in the present case. On both the issues i.e. use of spare parts during service under authorised service stations and sale thereof on payment of VAT and handling charges recovered from the customers in the invoices of vehicle sale, it is held that no Service Tax can be charged on that amount - Appeal of Revenue dismissed.
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