9911796707
TMI Blog2020 (4) TMI 76X X X X Extracts X X X X X X X X Extracts X X X X ..... ide India. The transaction involved sale of heavy commercial vehicles by the Appellant to MAN Germany and thereafter by MAN Germany to its buyers. 3. The Appellant has placed reliance upon Article 9.2 of the Agreement to contend that the Appellant would not be responsible for the 'after sale services' in relation to the vehicles supplied by the Appellant to MAN Germany and MAN Germany alone has to arrange for the after sale services for its customers on its own account. The Appellant, therefore, contends that since the after sale services have to be provided by MAN Germany, the Appellant extended a price reduction of 500 Euros to MAN Germany on sale of each heavy commercial vehicle to MAN Germany as per Article 9.5 of the Agreement. 4. A Show Cause Notice dated 10 October 2014 was, however, issued to the Appellant demanding service tax amounting to Rs. 2,50,95,589/- on the discounts allowed by the Appellant for the period: (i) April 2009 to June 2012 on reverse charge basis under Section 66A of the Finance Act, 1994 under 'business auxiliary service' ; and (ii) July 2012 to March 2014 under Section 66(E) (e) of the Finance Act as a declared service for 'agreeing to refrain fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ove, it is observed that the Noticee has provided service to MAN. Whereas as per the subject matter of the show cause notice, the Noticee has received taxable service from MAN. The show cause notice states that the Noticee has received the service from MAN but the provision quoted means that the Noticee has provided the service and both cannot be true at the same time. Further, The Noticee have not received any consideration for refraining themselves from providing warranty service. Thus, even if the Noticee is charged to have provided a taxable service, in the absence of any consideration, no Service Tax can be levied on them. Therefore, I find that the show cause notice has failed to make out any case against the Noticee for the period from 01.07.2012 to 31.03.2014 and the demand of Service Tax raised for this period cannot be sustained." 6. Shri B.L. Narasimhan learned Counsel appearing for the Appellant has made the following submissions; i. The provision of after sale and warranty services by MAN Germany to the end customers was in pursuance of its own obligations to such end customers and no service was rendered by MAN Germany on behalf of the Appellant; ii. The discount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lauses of the Agreement entered into between the Appellant and MAN Germany and they are as follows: "Export Agreement THIS AGREEMENT MADE ON THIS 1ST DAY OF DECEMBER 2006 BETWEEN- MAN Nutzfahrzeuge Aktiengesellschaft AND MAN FORCE TRUCKS PRIVATE LIMITED ********** AND WHEREAS MAN and FORCE agreed to use their powers to organize the export business of MFTPL and MAN undertook an obligation to enter into a long term arrangement for organizing the export business and agreed to enter into a contractual arrangement with MFTPL and MFTPL agreed to sell trucks including spare parts for markets outside India exclusively to MAN. NOW THESE PRESENTS WITNESSETH AND THE PARTIES HERETO AGREE AS FOLLOWS: Article 1 - Subject matter of the Agreement. 1.1. MFTPL shall supply, exclusively to MAN, affiliates of MAN, sister concerns of MAN, or MAN's designated buyer(s), with trucks, in particular the Export Products as defined below, including Spare Parts thereof, for intended sale in markets outside India according to the provisions hereof, and MAN undertakes to purchase from MFTPL the Export Products for sale in the "Export Markets" in accordance with the provisions hereof and to sell such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans all goods or services intended for use by the client; (iv) production or processing of goods for, or on behalf of, the client (v) provision of service on behalf of the client; or (vi) a service incidental or auxiliary to any activity specified in sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payments, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to "manufacture" within the meaning of clause (f) of section 2 of the Central Excise Act, 19944 ( 1 of 1994). ***** 12. The impugned order of the Principal Commissioner has made reference to sub-clause (vi), which is regarding provision of service on behalf of the client. The Principal Commissioner has in the impugned order stated that for the period of 1 April 2009 to 30 June 2012, it was clear from the clauses of the Agreement that the Appellant had shifted its responsibility of providing after sale service to MAN Germany, for w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Is your company under obligation to provide warranty and after sales service to your overseas customer? Ans. As a commercial trade practice, the warranty and after sales service is provided as per the contract with the customers. In case of export to MAN, the contract provides that such services will not be provided by the company. Q.9. Would that not mean that it is obligatory on the part of MAN to provide warranty and after sales service on your behalf? As per the agreement, the company sells vehicles to MAN and subsequently MAN may choose to provide or not to provide the warranty services to the customer of such vehicles." 15. The aforesaid statement of the Senior General Manager (Finance) would show that he had clearly stated that the discount that was offered to MAN Germany was because the Appellant was not providing warranty and after sale service. He also clearly stated that such after sale service will not be provided by the company and that it was open to MAN Germany to either provide or not provide after sale service to the customers. 16. The confirmation of demand, therefore, for the period 1 April, 2009 to 30 June, 2012 cannot be sustained. 17. In this view of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
