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No Service Tax leviable on Cost of Spares and accessories used for free services during warranty period

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No Service Tax leviable on Cost of Spares and accessories used for free services during warranty period
CA†Bimal Jain By: CA†Bimal Jain
June 8, 2023
All Articles by: CA†Bimal Jain       View Profile
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The CESTAT, Chennai in M/S. T.A.F.E ACCESS LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, COIMBATORE - 2023 (5) TMI 1154 - CESTAT CHENNAI set aside the order demanding Service Tax on cost of the spares/materials used for providing the free services provided during the warranty period. Held that, assessee is not liable to pay Service Tax on the cost of spares and accessories reimbursed by the manufacturer.

Facts:

M/s. T.A.F.E Access Ltd (“the Appellant”) an authorized dealers of M/s. Tata Motors (“the Manufacturer”) is engaged in selling of cars and providing free service during the warranty period for the cars sold by them. The expenses for providing free service were reimbursed by manufacturer.

The Appellant was paying service tax on the labour charges but was not discharging service tax on cost of spares which was reimbursed by Manufacturer.

The Assessing Authority vide a Show Cause Notice (“the SCN”) raised the demand to pay service tax on the reimbursement received from the manufacturer towards the supply of parts and accessories during the free warranty and services. 

The Appellant filed the reply to the SCN and after considering the reply the Adjudicating Authority confirmed the demand.

Aggrieved by the demand, the Appellant filed an appeal before the Commissioner (Appeal)

who vide Order-in-Appeal No. CMB-CEX APP 101/12 dated May 21, 2012 (“the Impugned Order”) upheld the order passed by the adjudicating authority.

Being aggrieved, this appeal has been filed.

Issue:

 Whether the cost of spares and accessories reimbursed by the manufacturer on account of free services provided during the warranty period  is leviable to service tax?

Held:

The CESTAT Chennai M/S. T.A.F.E ACCESS LTD. VERSUS COMMISSIONER OF GST & CENTRAL EXCISE, COIMBATORE - 2023 (5) TMI 1154 - CESTAT CHENNAI held as under:

(Author can be reached at info@a2ztaxcorp.com)

 

By: CA†Bimal Jain - June 8, 2023

 

 

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