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2023 (5) TMI 1154 - AT - Service TaxLevy of Service tax - selling passenger cars and also provide free services to their customers during warranty period - cost of materials/spares reimbursed by M/s. TATA Motors - cost of spares and accessories reimbursed for free services provided during the warranty period has to be included in the taxable value or not. HELD THAT:- The department has relied upon Rule 5 (1) service tax (determination of value 2006) which reads “wherein expenditure or costs are incurred by the service provider in the course of providing taxable service, all such expenditure or costs shall be treated as consideration for the taxable services provided or to be provided and shall be included in the value for the purpose of charging service tax on the said notification”. This Rule was under consideration before the Hon’ble Supreme Court in the case of UNION OF INDIA AND ANR. VERSUS M/S. INTERCONTINENTAL CONSULTANTS AND TECHNOCRATS PVT. LTD. [2018 (3) TMI 357 - SUPREME COURT] and it was held that reimbursable expenses cannot be included in the taxable value. The period involved is prior to the amendment of Section 67 of the Finance Act, 1994. The very same issue as to whether the cost of spares and material used for free services during warranty period has to be included in the taxable value or not was considered by the Tribunal in the case of ABT LTD. VERSUS CCE, COIMBATORE, CHANDRA AUTOMOBILE INDIA PVT. LTD. AND SREE SARADHAMBAL AUTOMOBILES P. LTD. [2018 (5) TMI 716 - CESTAT CHENNAI] and it was held that the cost of spare parts cannot be included for purposes of levy of service tax. Such demand of service tax is not justified and hence are set aside. The demand cannot sustain - Appeal allowed.
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