9911796707
TMI Blog2016 (3) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... in continuation of the original warranty. These warranties are sold to customers through the dealer network before the expiry of the standard warranty included in the purchase package for which the manufacturer allows the dealer to retain the agreed upon commission from the amount paid by the customer. The rates for extended warranty, depending upon the period covered and the time lapse from the purchase of the car varied between Rs. 3,550/- and Rs. 6,250/- for one year and between Rs. 7,550/- and Rs. 13,000/- for two year term. M/s Honda SIEL enters into back-to-back agreements with insurance companies who reimburse them in the event of expenses incurred under the extended warranty scheme. Under the scheme of extended warranty, the dealer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccepting the submission of the noticee that the warranty scheme did not fall within the category of rendering of 'business auxiliary service' and that the transaction could not be considered a taxable event. 4. Revenue further argues that the warranty is a three-way arrangement and the provision of extended warranty is a service for which the consideration is the charge levied from the customer. In the review order appended to the appeal, a definition of service is provided and claims that the respondent, who has created an infrastructure, facilitates the customer in taking advantage of the warranty. It is further contended that respondent provides 'business auxiliary service' to the dealers by procuring these services on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondent renders a service at all; what is pertinent is only whether 'business auxiliary service' is rendered by M/s Honda SIEL. 8. M/s Honda SIEL is a manufacturer whose existence is dependent on the purchasers of its motor cars. To retain that market and to widen it, a number of services could well be rendered to various entities in relation to the sale of cars. The cars that are sold to car-owners as its primary business activity are packaged attractively through post-sale services rendered through its dealer network. Dealers are, in relation to the sale of cars and conditions attached to the sale, agents of the manufacturer with the customer as the beneficiary of offerings made available by the manufacturer. 9. The beneficia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the respondent opts for an insurance scheme in which the insurer compensates the respondent is an entirely different transaction. It is not the car sold by the manufacturer or the scheme itself that is covered by the insurance but the possible contingency of replacement of defective parts. There is every possibility that such a warranty may not have to be resorted to for any of the cars; indeed that is the belief of both the seller and the buyer. Actual replacement may be the service but payment made for coverage of the improbable risk cannot be found to fit the definition of 'business auxiliary service.' The uncertainty built into the performance in relation to the warranty removes it from the realm of taxability which as per sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... For the removal of doubts, it is hereby declared that, for the purposes of this sub-clause, ''inputs" means all goods or services intended for use by the client;"] 14. The word 'client' is not defined in Finance Act, 1994 or in the Central Excise Act, 1944. The Oxford Advanced Learner's Dictionary assigns the following meaning to it: 'a person who uses the services or advice of a professional person or organisation' The usage is attributed to late Middle English and has its roots in Latin denoting a pleabian under the protection of a patrician in Ancient Rome. Hence it found adaptation to depict the relationship of a person under the protection of a professional. Except rarely, the words 'client' and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
