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Toyota Lakozy Auto Pvt. Ltd. Versus Commissioner of Service Tax/Central Excise Mumbai -II / Mumbai - V

2016 (12) TMI 541 - CESTAT MUMBAI

Levy of tax - commission earned on sale of cars - facilitation charges collected from customers for registration of vehicles - commission foregone on loans marketed by appellant to customers - Held that: - One of the essential requirements in taxing of services is the existence of ‘service-provider’ and ‘recipient of service’ with the latter making over the agreed upon consideration to the former. Appellant, admittedly, markets products of financial institutions for which they are entitled to a .....

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er service rendered to another recipient. The manner in which the financial institution treats these outflows of commission and inflow of interest would unlock the proper perspective of consideration in these transactions, particularly, the one between the appellant and the financial institution. This is an aspect that has not been attended to in the impugned order. - Likewise the contention of the appellant that there are errors in computation among which are inclusion of the amounts not re .....

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eem it appropriate that the matter be remanded to the original authority for deciding afresh on the last two issues. The other two issues are not the subject of this remand as they stand decided in favour of appellant - appeal allowed by way of remand. - APPEAL No.ST/81 & 149/2012 - Order No.A/93871-93874/16/STB - Dated:- 17-11-2016 - Shri Ramesh Nair, Member (Judicial) And Shri C J Mathew, Member (Technical) Shri S.B. Gabhawala, Chartered Accountant for the appellant Shri Roopam Kapoor, Commiss .....

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stomers. 2. Separate appeals have been preferred against two orders-in-original pertaining to the period from July 2004 to March 2007 and from April 2007 to March 2011. The demands confirmed in the two appeals are ₹ 1,58,69,430/- and ₹ 1,57,12,236/-; the impugned order holds appellant liable to tax on commission earned on sale of cars, on facilitation charges collected from customers for registration of vehicles and commission foregone on loans marketed by appellant to customers. It .....

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by the latter on principal-to-principal basis on which title and risk, as per Agreement, are passed on to appellant when the vehicles are excise cleared and placed on common carrier. Depending on order quantity, the manufacturer raises invoices after according discounts which are designated as commission/incentive merely as a management terminology. Learned Chartered Accountant for appellant places reliance in the decisions of the Tribunal in Jaybharat Automobiles Limited v. Commissioner of Ser .....

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om the car dealer, we find that the relationship between the appellant and the dealer is on a principal to principal basis. Only because some incentives/discounts are received by the appellant under various schemes of the manufacturer cannot lead to the conclusion that the incentive is received for promotion and marketing of goods. It is not material under what head the incentives are shown in the Ledgers, what is relevant is the nature of the transaction which is of sale. All manufacturers prov .....

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spare parts for promoting and marketing the products of MUL, the contention is that these incentives are in the form of trade discount. The assessee respondent is the authorized dealer of car manufactured by MUL and are getting certain incentives in respect of sale target set out by the manufacturer. These targets are as per the circular issued by MUL. Hence these cannot be treated as business auxiliary service. 4. Learned Authorized Representative reiterates the findings of the adjudicating aut .....

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of business auxiliary services . Learned Chartered Accountant draws our attention to the decision of the Tribunal in Wonder Cars Pvt Ltd v, Commissioner of Central Excise, Pune - I [2016-TIOL-190-CESTAT-MUM]. This Tribunal, in its recent order in M/s Arpanna Automotives Pvt Ltd v. Commissioner of Customs & Central Excise [Final order no. A/85827 - 85828/16/STB dated 3rd February 2016], held that 7. In our considered view helping the purchaser with registration with the RTO, cannot be any con .....

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oing, the Service Tax liability confirmed under Business Auxiliary Service for the amount of RTO registration fees is set aside. As regards the penalty imposable, we find the Service Tax liability of the amounts received from the various financial institutions, whether is taxable otherwise was settled by the Larger Bench, there were two different streams of the decisions contradicting each other. As the issue needs to be settled by the Larger Bench, the appellant having discharged Service Tax li .....

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buyers together. For this, financial institutions offer them a commission on the loan amount sanctioned of which a portion is passed on the customer as an upfront subvention of the total interest payable. The appellant pays tax only on the actual commission received and the impugned order has confirmed tax of ₹ 18,28,528/- and ₹ 3,80,825/- for the two periods in dispute. Learned Authorized Representative relies upon Jaybharat Automobiles Limited v. Commissioner of Service Tax, Mumbai .....

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e decisions cited by both sides. One of the essential requirements in taxing of services is the existence of service-provider and recipient of service with the latter making over the agreed upon consideration to the former. Appellant, admittedly, markets products of financial institutions for which they are entitled to a commission. There is common ground here on the taxability of commission as received. However, the appellant claims to have waived a portion of the commission otherwise receivabl .....

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