GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (3) TMI 669 - CESTAT NEW DELHI

2016 (3) TMI 669 - CESTAT NEW DELHI - 2016 (43) S.T.R. 390 (Tri. - Del.) - Liability of tax on extended warranty service between October 2005 and September 2010 - Business Auxiliary Services - Money received towards extended warranty - Held that:- the context in which the service becomes taxable is that of an intermediary who arranges goods or services for further business activity; the use of the words 'inputs' and 'client' as well as the explanation appended would make it appear to be so. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

reate an intention to use the service of the dealer. Therefore, no liability of tax arises under Business Auxiliary Services on money received towards extended warranty. - Decided against the department - Appeal No.ST/543/2012 - Final Order No. ST/A/53950/2015-CU(DB) - Dated:- 30-10-2015 - G RAGHURAM, PRESIDENT AND CJ MATHEW, MEMBER (TECHNICAL) For the Petitioner : Shri Amresh Jain, DR For the Respondent : Shri B L Narsimhan, Adv. ORDER PER: C J MATHEW: M/s Honda SIEL, are manufacturers of autom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ount 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 ₹ 3,550/- and ₹ 6,250/- for one year and between ₹ 7,550/- and ₹ 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 rectifies a .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

r services for defects during the duration of the extended warranty, relied upon M/s Honda SIEL to procure for them these goods and services; thus M/s Honda SIEL are liable to tax in the category of 'business auxiliary services.' Commissioner of Central Excise, Large Taxpayers Unit (LTU) Delhi, vide order-in-original no. 28/Commr/2012 dated 10th January 2012, dropped proceedings against M/s Honda SIEL. Revenue is in appeal against the impugned order. 3. Learned Authorized Representative .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

epting 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

utomobile dealers within the taxable entry relating to 'business auxiliary service' is palpable. It would appear that the sufficiently wide specifications in section 65(19) prompts such efforts. It is claimed on the one hand that the client is the recipient of services which are procured by the respondent and on the other that the business auxiliary service is provided to the dealers by the respondent. An attempt has also been made to define service -otiose, considering that each of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

der passed by a Commissioner under section 73 or 83 A of Finance Act, 1994 in adjudication or appeal. It does not extend to review of the show cause notice issued under section 73. 6. Heard both sides. 7. We do not need to delve on whether the 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 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e extended warranty scheme, in relation to the cars, is the purchaser of the cars. The dealer may derive earnings from the contingency covered by the warranty but, being an authorized dealer for the said cars, that custom is, in any case, assured in the event that defective parts have to be replaced even without the existence of such a scheme. There is no enhancement of business or increase arising from the extended warranty scheme; such enhancement arises from defects in the cars. 10. The respo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ich are attempted to be mitigated through the extended warranty scheme. Cars are not likely to be popular in the market without warranties that serve as risk mitigants and extended warranty is merely an additional feature that has not been included in the sale price. That does not, of itself, render it a service and certainly not a taxable service. 11. The source of recompense for the contingency covered by the extended warranty scheme has been contended as relevant to taxability. That the respo .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 section 65 (105) of Finance Act, 1994 bestows the certainty of 'provided or to be provided' to each of the services listed therein. The taxable event picturised by the alternate phrase 'to be provided' is not qualified by the word 'agreed' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the contingency provided for in the warranty scheme - standard or extended - arises. The finding of the adjudicating authority that a taxable event has not occurred cannot therefore be wished away. 13. Revenue has cited section 65(19)(vi) as the service which best describes the extended warranty scheme the consideration for which is sought to be taxed. The taxable service in section 65 (105) (zzb) of the Finance Act, 1994 is: "to a client by any person in relation to business auxiliary serv .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

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 'customer' .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version