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M/s My Car Pvt. Ltd. Versus C.C.E., Kanpur

Taxability of incentives & reimbursements received from MUL - authorized dealer of Maruti Udyog Limited (MUL) - Business Auxiliary Service - Held that:- Appellant has mainly argued on the parameters that various incentives given by MUL, on which service tax demand is proposed to be raised under BAS, are of the nature of trade discounts based on performances or are simply certain reimbursements made by MUL for Sales/Joint benefit, which can not be considered as provision of Business Auxiliary Ser .....

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year 2003-2004; they have been able to reconcile certain payments made which clearly indicate that more service tax has been paid then what is demanded. We find that such a verification of claims made by the appellant can only be properly done by the Adjudicating Authority. - Matter remanded back - Decided in favour of assessee. - Service Tax Appeal No.479 of 2010 - ST/A/52197/2015-CU[DB] - Dated:- 8-7-2015 - Mr. G. Raghuram, President and Mr. H.K. Thakur, Technical Member, JJ. For the Petitione .....

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hi (Advocate), Shri Ankit Vishnoi (Advocate) and Ms. Yashasvini Chandra (Advocate) appeared on behalf of the appellant. Learned Advocate Shri Amit Awasthi argued that appellant is an authorised dealer of Maruti Udyog Limited (MUL) and is registered with the Revenue for providing Motor Vehicle Servicing, Business Auxiliary Services and Clearing and Forwarding Services. It was argued that the case of the Revenue is regarding following incentives & reimbursements received from MUL on which serv .....

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e of Free Credit ; (x) Incentive on sale to employees of LIC, SBI, Fetchers Scheme etc. ; (xi) Incentive for sale of Esteem & Maruti 800 etc. ; (xii) Misc. Spot Credit & IFC (Interest Free Credit) ; (xiii) Moss (Maruti Online Services) ; (xiv) Free Mega Checkup Camps ; (xv) Exchange Charges TV (True Value) and Non TV ; and (xvi) Free Services Charges. 2.1 Learned Advocate made the Bench go through each of the above schemes/incentives/reimbursements, as discussed by the Adjudicating Autho .....

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ice Station Ltd. Vs. CCE, CUS & ST, Cochin - [2015 (37) S.T.R. 516 (Tri. Bang.)] to argue that Exchange Charges TV and Non-TV are not liable to service tax. With respect to commissions received from MUL it was argued that MUL has paid service tax on the gross amount received from financial institutions which is covered as per para 17 of case law CST, Mumbai I Vs. Sai Service Station Ltd. [2014 (35) S.T.R. 625 (Tri Mumbai)]. Regarding service tax on free services provided by the appellant it .....

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missioner. It was his case that this verification of correct service tax payment can be made by the Adjudicating Authority for correct demand on workshop service charges for financial year 2004-2005. That a short brief can be filed with respect to demand under the head delayed payment of service tax for the financial year 2003-2004 also it was argued that excess payment has been made by the appellant, which needs verification. 3. Shri B.B. Sharma (AR) appearing on behalf of the Revenue argued th .....

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are of the nature of trade discounts based on performances or are simply certain reimbursements made by MUL for Sales/Joint benefit, which can not be considered as provision of Business Auxiliary Services. Various activities/incentives involved in these proceedings are deliberated as follows :- (i) Commission on Extended Variety:- Appellant is providing certain after sales services to the customers on behalf of MUL for which appellant is getting a commission from MUL and the same is accounted in .....

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appellant and MUL these facilities are required to be available by the appellant for which certain payments are received from MUL. Such a facility made available to the customers by the appellant is on behalf of MUL and such expenditures are reimbursed by MUL and not from dealers margin. Such an activity will be covered within the definition of BAS under Section 65 (19) (iii) of the Finance Act, 1994 and has been correctly held as taxable by the Adjudicating Authority. (iii) Free Services Charge .....

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ervice station, or centre, authorised by any motor vehicle manufacturer, to carry out any service, repair, reconditioning or restoration of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer, and the related taxable service is defined as a service rendered to a customer, by an authorised service station, in relation to any service, repair, reconditioning or restoration of motor cars, light motor vehicles or two wheeled motor vehicles in any manner. .....

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ers. The respondents have also stated that providing such free services is part of the functions and duties of dealers who are entitled to the dealership commission. Also the free services are rendered to the car buyers and not to M/s MUL and the car buyers pay nothing therefore. Seen in this light it is evident that the demand of service tax as per column 5 of the table above is misconceived. Coming to the demand of servie tax on the amount received on account of salary of drivers of vans used .....

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ecord that in the present appeal also any separate consideration is received by the appellant from either MUL or the customers for providing such free service. Accordingly it is held that no service tax is payable on the free service provided by the appellant. (iv) For incentive on spare parts it is the case of the appellant that these incentives are given to the appellant for achieving certain targets of purchase of spare parts which is purely an activity of buying and selling on which local VA .....

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me, Misc. Spot Credit and IFC, Finance pay out and National Subvention of MUL, part reimbursement of advertisement and incentive for arranging camps/sales mela and Free Mega Checkup Camps. It is the case of the appellant that all these amounts received from MUL, are either compensatory payments or in the nature of performance based trade discounts on achieving certain performance targets or is an activity which is mutually beneficial to both the appellant and MUL. It is not the case of the Reven .....

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r Section 65 (19) of the Finance Act, 1994. (v) On the issue of Exchange Charges True Value (TV) and non-True Value (non-TV), it is the case of the appellant that such activity is related to purchase of used pre-owned cars of Maruti and subsequently sale to other buyers after refurbishing or refurnishing. That such an activity is purely buying and selling activity of used/pre-owned cars and the same cannot be held to be provision of BAS to MUL. Appellant relies upon the case law of SAI Service S .....

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