TMI Blog2020 (1) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... s any sum allowed by way of any kind of discount or rebate according to the practice normally prevailing in the trade, but inclusive of any statutory levy or any sum charged for anything done by the dealer in respect of the goods or services rendered at the time of or before the delivery thereof, except the tax imposed under this Act. A Division Bench of the Mumbai Tribunal in AUTOMOTIVE MANUFACTURERS PRIVATE LTD VERSUS COMMISSIONER OF CENTRAL EXCISE AND CUSTOMS, NAGPUR [ 2015 (2) TMI 972 - CESTAT MUMBAI] examined whether handling charges collected by the Appellant therein for bringing parts and components from the warehouse/ depot of Maruti Udyog Ltd to the service station could be subjected to service tax. It was observed that service tax could not be levied on such charges since they form part of the value of goods sold - The Tribunal also held that handling charges were incurred in connection with the procurement of the goods and are included in the value of goods sold and VAT liability has to be discharged by including the cost of the handling charges. Thus, any consideration received for supply of goods would not be covered within the scope of section 66 of the Finance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty and a penalty of ₹ 1,00,000/- was imposed upon the Managing Director of the Appellant. 3. The Appellant is a dealer of Maruti Udyog Ltd. The main business of the Appellant is to sell motor vehicles manufactured by Maruti Udyog Ltd. The Appellant collected handling/ logistic charges , from the customers, over and above the ex-show-room vehicle price. It is the collection of this charge which is in dispute in this Appeal. According to the Appellant, the handling charges/ logistic charges range from ₹ 2500/- to ₹ 5500/- inclusive of VAT and such amount covers expenses like transportation charges to bring the vehicle from the stockyard to the show-room, maintenance and upkeep, initial supply of petrol/ diesel for bringing the vehicle for starting and the movement of the vehicle till the final delivery at the time of sale. The Appellant disclosed this amount separately in the bills issued at the time of sale of the vehicle. The Appellant collected ₹ 7,17,12,175/- as handling/ logistic charges and paid an amount of ₹ 1,07,56,826/- as VAT for this amount. The details are as follows; Year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant was not required to pay any service tax under the Act. It was specifically stated that handling/ logistic charges were collected in connection with the procurement of the goods and were included in the value of the goods sold and, therefore, VAT was correctly paid. It was also pointed out that the sale invoices issued to the customers at the time of the delivery of the vehicle included this charge. In support of the contention, reliance was placed upon a decision of the Division Bench of the Mumbai Tribunal in Automative Manufacturers (P.) Ltd. Vs Commissioner of Central Excise and Customs, Nagpur [2015] 63 taxmann.com236 (Mumbai-CESTAT). The Joint Commissioner however, did not accept the contention of the Appellant and confirmed the demand with penalty and interest. 6. Feeling aggrieved, an Appeal was filed by the Appellant before the Commissioner (Appeals), which was dismissed by order dated 28 May 2019. The relevant observations of the Commissioner (Appeals) are reproduced below: But in the instant matter, there is no such situation and the logistic charge has been collected separately towards the movement of vehicle from stock yard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e, as defined under the provision of the Finance Act as no service is provided; (ii) The handling/ logistic charges are for activities carried by the Appellant before the sale of the car and, therefore, when sale itself has not been completed, no service could be said to have been provided which could be subjected to service tax under the Finance Act; (iii) The Appellant was paying service tax up to July 2010 on the handling/ logistic charges, after which the Appellant starting paying VAT on the said amount in view of the assessment order received from the VAT Department; (iv) Based on the VAT demand notice and as per the provision of the VAT Act, the Appellant collected ₹ 7,17,12,175/- from July 2012 up to August 2015 and paid VAT to the extent of ₹ 1,07,56,826/- as per the prevailing VAT rate of 15%; and (v) To support the contention, reliance has been placed upon a decision of the Mumbai Tribunal in Automative Manufacturers (P.) Ltd. 9. Shri Vivek Pandey learned Authorised Representative of the Department has, however, supported the impugned order and has submitted that: (i) The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urement of the goods and are included in the value of goods sold and VAT liability has to be discharged by including the cost of the handling charges. Thus, any consideration received for supply of goods would not be covered within the scope of section 66 of the Finance Act. In coming to this conclusion, the Bench placed reliance upon earlier decisions of the Tribunal in M/s Ketan Motors Ltd. Vs Commissioner of Customs, Central Excise Service Tax, Nagpur 2014 (33) S.T.R. 165 (Tri.- Mumbai) and Commissioner of Central Excise, Chandigarh Vs M/s Dynamic Motors 2012 (26) S.T.R. 145 (Tri.-Del). The relevant portion of the decision of the Mumbai Tribunal in Automative Manufacturers is reproduced below: 3. The learned Counsel for the Appellant submits that the Appellant is an authorized dealer of Maruti Udyog Ltd. and are registered with the department as an authorized service station for Maruti cars and they have been discharging/ Service Tax liability on servicing/ repairing of the vehicles undertaken by them. While repairing or servicing of the vehicles, they also sometimes used parts on which sales tax/ VAT liability is discharged. The parts and components are p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd are included in the value of the goods sold and sales tax/ VAT liability is discharged on the value inclusive of the handling charges. Therefore, we do not understand how service tax levy would apply especially when the goods are subject to sales tax/VAT on a value inclusive of handling charges. It is not dispute that the handling charges are incurred in connection with the procurement of the parts. If that be so, they will obviously form part of the value of the goods when they are subsequently sold. 5.1 Section 67 of the Finance Act, 1994 mandate levy of service tax on a value or consideration received for rendering the services. Therefore, any consideration received for supply of goods is not covered within the scope of Section 67. The decisions of the Tribunal in the case of Ketan Motors Ltd and Dynamic Motors, cited (supra) also support this view. [emphasis supplied] 14. On a consideration of the factual position before the Mumbai Tribunal in Automative Manufacturers and the present Appeal, it would be seen that they are basically the same. Thus, the decision of the Tribunal in Automative Manufacturers (P.) Ltd would conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Appellant to the customers. The Supreme Court, however, observed that even if a tax is wrongly remitted, that would not absolve the party from paying the service tax if the same is otherwise found payable and a liability accrues on the assessee. 18. Thus, the service tax could not have been charged from the Appellant. What needs to be noted is that though the Appellant had specifically referred to the decision of the Tribunal in Automative Manufacturers Ltd, both before the Joint Commissioner as also before the Commissioner (Appeals), yet neither the Joint Commissioner nor the Commissioner (Appeals) have made any reference to this decision. This decision, which has a great bearing on the controversy, should have been noticed and in case, the Joint Commissioner or the Commissioner (Appeals) thought that it was not applicable, should have distinguished. However, these decisions have not even been considered by the Joint Commissioner or the Commissioner (Appeals). 19. Thus, for all the reasons stated above, it is not possible to sustain the order dated 28 May 2019 passed by the Commissioner (Appeals). It is accordingly set aside and the Appeal is all ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
