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2024 (7) TMI 1255 - AT - Service TaxLevy of service tax - incentives / discounts received by the appellant from the manufacturer of cars and lubricants viz. Volkswagen - requirement to pay an amount collected @ 5% / 6% / 7% of the value of trading activity under Rule 6 of CENVAT Credit Rules 2004 when the appellant had paid the entire credit attributable to input services utilized for trading activity - CENVAT Credit on various input services - levy of penalty. Levy of service tax - incentives / discounts received by the appellant from the manufacturer of cars and lubricants viz. Volkswagen - HELD THAT - The facts not in dispute are that the appellant are authorized dealers of Volkswagen brand cars and also providing services of cars of the said brand. On purchase of the cars from the manufacturer Volkswagen Limited they received various discounts / incentives on achieving the sales target during the relevant period. Applicability of service tax on trade discount / incentives received by an authorized automobile dealer from the manufacturer is no more res integra and covered by a recent judgment of this Tribunal in the case of M/S PREM MOTORS PRIVATE LIMITED VERSUS COMMISSIONER CENTRAL EXCISE CGST-JAIPUR 2023 (2) TMI 990 - CESTAT NEW DELHI wherein the Tribunal scrutinizing the case laws on the subject observed the activity undertaken by the appellant is for the sale and purchase of the vehicle and the incentives are in the nature of trade discounts. The incentives therefore form part of the sale price of the vehicles and have no correlation with the services to be rendered by the appellant. That in terms of the dealership agreement the appellant purchases the vehicles from MSIL and sells the same to its end customers. Applicability of 5% / 6%/7% of the value of the trading activity under Rule 6(3)(i) of Cenvat Credit Rules 2004 - HELD THAT - The appellant has reversed the total credit attributable to input services that had been used in providing trading activity; therefore considering the Notification No.13/2016-CE(NT) dated 01.03.2016 issued subsequently wherein it is prescribed that in the event an assessee pays the amount of cenvat credit attributable to exempted products calculated as per Rule 3A of the CENVAT Credit Rules the appropriate officer competent to adjudicate the case may allow the manufacture or provider of output services to follow the procedure and pay the amount referred to in clause (ii) of sub-rule (3) calculated for each of the month with interest. Therefore to ascertain the amount of cenvat credit attributable to input services used in trading activity be determined along with interest - Taking note of the argument of the appellant that they have already paid/reversed Rs.42, 30, 802/- against Challan No.00244 dated 08.01.2018which is in excess of Rs.10, 42, 813/- the matter needs to be remanded to the adjudicating authority to ascertain the said fact and recompute the liability with interest. Imposition of penalty - HELD THAT - The major part of the demand has been set aside and on the issue of applicability of Rule 6 it is observed that the appellant had already reversed the attributable cenvat credit which is in excess of Rs.10, 42, 813/- than the amount payable by them as claimed by them; therefore imposition of penalty under Section 78 of the Finance Act or Rule 15(3) of the CENVAT Credit Rules is unwarranted and accordingly set aside. The confirmation of demand of Rs.3, 03, 50, 663/- on various incentives / discounts with interest and penalty and the amount of Rs.3, 84, 28, 721/- confirmed under Rule 6(3) of Cenvat Credit Rules 2004 being 5%/6%/7% of the value of the exempted services are set aside - the penalties imposed on the appellant are set aside - the matter is remanded to the adjudicating authority for the purpose of verification/scrutinization. Appeal disposed off by way of remand.
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