9911796707
TMI Blog2023 (6) TMI 995X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; 2.2. The appellants are engaged in sale and purchase of motor cars of M/s. Maruti Suzuki India Ltd., (MSIL) under the brand name "Maruti", since March 2007. They are also running 'authorised service station' for Maruti vehicles sold by them and also for the vehicles sold by other dealers in India. They have rented out some portion of the premises on lease. On scrutiny of the appellant's records during an Audit conducted by the Department, as well as on the basis of Audit report No.59/2012-13 (Para1) dated 04.05.2012 and the ST Returns filed, it appeared that the appellants had short paid service tax during the period 2007-2008 (October, 2007 to March, 2008) to 2012-2013 (upto June, 2012). Accordingly, show cause notice proceedings were initiated by the Department demanding service tax along with interest and penalty vide Show Cause-Cum-Demand Notice No.53/ST/Gr.VII/COMMR./ ADJ/2013 dated 22.4. 2013. Upon consideration of the reply of the appellant dated 9.7.2013 and after giving personal hearing to the appellant on 05.09.2013, the Commissioner adjudicated the case confirming the adjudged demands of service tax besides imposition of penalty vide Order-in-Original N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to go back to the Adjudicating Authority for recomputation of the correct service tax demand." Accordingly, the Pr. Commissioner in his de novo proceedings had recalculated the service tax liability on 'Renting of immovable properties', duly taking into account the total service tax payable of Rs. 30,49,699/- for the period 2007-2008 to 2012-2013 (Upto June, 2012) and the actual service tax paid by the appellants for Rs.28,18,156/- in 39 nos. of GAR-7 challans, and finally arrived at the amount of service tax short paid as Rs.2,37,553/-. 2.5. Similarly the Tribunal in its order 04.02.2015, had given its findings in respect of the service tax liability on 'Authorised to Service Station' as follows: "5.2. Similarly, in respect of demand under the taxable service category of 'Authorised Service Station', here also we find that the appellant has discharged part of the service tax liability through Cenvat credit account and part in cash. However, due credit for these payments have not been given by the Adjudicating Authority for the reason that the payments through Cenvat credit was not correctly reflected in the ST-3 returns filed by the appellant, even though for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in dispute relates to incentive received from Maruti Suzuki Ltd. The appellants claim is that this income is nothing but trade discount received by them which is in the nature of quantity discount and has been passed on to the appellant by Maruti Suzuki Ltd. by way of credit notes. It is also the submission that the credit notes indicate the period to which the discount relates and the corresponding discount circular issued by Maruti Suzuki Ltd. It is also submitted that they have made correspondence with the Maruti Suzuki Ltd. which would clearly indicate that the amount, even though described as incentive, is in fact a trade discount. However, it is clearly submitted that the correspondence with Maruti Suzuki Ltd. were not furnished before the Adjudicating Authority at the time of adjudication. Therefore, the appellant should be given a fair opportunity of producing these documents to satisfy the Adjudicating Authority with respect to their contention that these are nothing but trade discounts. Alternately, the department can also find out from the excise authorities in charge of Maruti Suzuki Ltd. as to how the amount given by way of incentives has been treated for excise purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s (such as cash back incentive scheme for retail target achievement, RMK claim, ISL claim, Exchange bonus, RIPS incentive on SX4 model, incentive scheme of GM&TL for model SX4 etc.) have specific objectives. Hence, it appeared to him that M/s MSIL had paid such consideration to the appellants with the objective of promoting the sale of their products through the dealer. Thus he concluded that the incentives earned by the appellants are nothing but commission earned for performing tasks beyond the scope of a dealer. On the basis such discussions, he finally concluded that the discounts are meant to incentivize the performance of the dealer for carrying out specific tasks well beyond the scope of normal dealer. Accordingly, he calculated the amount of service tax payable on business actually services as Rs.1,29,32,934/- in the impugned order. 2.7. On the above basis, the Pr. Commissioner, in the impugned order dt. 19.01.2016 had re-computed the service tax liability on the following services: (i) 'Renting of immovable properties' services as Rs.2,37,553/-; (ii)'Authorised Service Station' services as Rs. 3,77,161/-; and (iii) 'Business Auxiliary Services' as Rs.1,29,3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es as Rs. 3,77,161/- is acceptable to the appellants and they are not contesting the demand of service tax on the above two aspects. Accordingly, we find that there is no need for us to further examine on the above two issues. 5.3. Further, in respect of service tax liability on 'Business Auxiliary Services', the matter was sent for de novo proceedings to take into consideration the various contentions raised by the appellants and to pass a reasoned order, after giving reasonable opportunity of personal hearing to the appellants. Accordingly, the impugned order re-determined the amount of service tax payable on business actually services as Rs.1,29,32,934/-. However, we find that such recalculated amount of service tax payable on business auxiliary services were not acceptable to the appellants and they had contended this demand in this appeal before the Tribunal. Thus, we take up this issue for our detailed examination. 6.1. Section 65(19) of the Finance Act, 1994 defines the term "business auxiliary service" as follows: "Business Auxiliary Service" means any service in relation to, - (i) promotion or marketing or sale of goods produced or provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re for the services rendered to them in connection with sales promotion/marketing of the vehicles manufactured by them as discussed in detail in impugned order and as briefly stated in para 2.6 above and recalculates the service tax payable by the appellant. 6.2. We find that the relevant sub-clause invoked in the impugned order is relating to "(i) promotion or marketing or sale of goods produced or provided by or belonging to the client". From the discussion in impugned order at para 22.05.05 with illustrated invoice, it is very clear that M/s MSIL is the manufacturer of car and they sell the car to the appellants under an invoice indicating the assessable value and various components of additions and deductions with Net invoice value for such sale. Subsequently, when the appellant is able to sell the car to the ultimate customer, then a separate invoice is being raised by the appellant and on which applicable VAT/Sales Tax is payable. Hence, the nature of transaction in the case is principal-to-principal basis. Further, in order to subject a particular activity of the appellant for the levy of service tax, it has to satisfy the various elements of taxable service i.e., (i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to authorized motor vehicle dealers and service stations - Reg. It has been brought to the notice of the Board that certain doubts have arisen in respect to activities undertaken by authorized motor vehicle dealers and service stations. The issues are as mentioned below:- (a) Whether the mark-up (profit) on the spare parts sold by a service station during the servicing of vehicles is liable to payment of service tax? (b) Whether exemption can be claimed on the cost of consumables that get consumed during the course of providing service? (c) Whether 'free services' given by the authorized dealers (for which they are reimbursed by the vehicle manufacturers) are subjected to service tax? (d) Whether the commission received by the automobile dealers from Banks /Non Banking Financial Companies (NBFC), for introducing the customers seeking finances / loans to such banks / NBFCs is to be subjected to service tax? Further, in case part of these incentives are passed on by the dealers to the customers, whether tax would be leviable only on that part of incentive, which is retained by the dealers or whether it would be on full amount? (e) Whether s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ancial company and not on the balance amount, i.e., after excluding the amount that he passes on to the customer. 5. As regards the applicability of service tax on the activity of servicing /repairing of the commercial vehicles, it is clarified that as regards 'authorized service stations', the taxable service, means any service provided or to be provided, to a customer, by an authorized service station, in relation to any service, repair, reconditioning or restoration of motor cars, light motor vehicles or two wheeled motor vehicles, in any manner. Further, a 'light motor vehicle' means any motor vehicle constructed or adapted to carry more than six messengers, but not more than twelve passengers, excluding driver. Similarly, as per the 'Motor Vehicle Act', a 'motor car means any motor vehicle other than a transport vehicles, omnibus, road-roller, tractor, motor cycle or invalid carriage'. In other words, servicing, repair, reconditioning or restoration of specified types of vehicles (whether they are used for commercial purposes or not) fall under the category of taxable services. However, servicing of vehicles like trucks is not within the ambit of service tax. 6. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmity in the adjudication order whereby the adjudicating authority dropped the demand. Hence, the appeal filed by the Revenue has no merit." We further find that this case was appealed before the Hon'ble Supreme Court in Civil Appeal No(s). 690-691 of 2015 and the Apex Court had ordered for remand of the matter to the Tribunal for afresh consideration only of the issue of penalty on the appellant, as the same has not been considered in spite of rectification of mistake application having been filed. 6.4. Further, in the case of Commissioner of Service Tax, Mumbai Vs. Jaybharat Automobiles Limited 2016 (41) S.T.R. 311 (Tri.-Mumbai), the Tribunal has held as follows: "6.5 On the appeal by Revenue on the issue of incentives received by the appellant from 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greement between the appellant and M/s. Toyota Kirloskar Motor Limited is one of supply of vehicles 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 Service Tax, Mumbai [2015-TIOL-1570CESTAT-MUM = 2016 (41) S.T.R. 311 (Tri.)], Sai Service Station Limited v. Commissioner of Service Tax, Mumbai [2013-TIOL-1436- CESTAT-MUM = 2014 (35) S.T.R. 625 (Tri.)], Tradex Polymers Private Limited v. Commissioner of Service Tax, Ahmedabad [2014 (34) S.T.R. 416 (Tri.-Ahmd.)] and Garrisson Polysacks Private Ltd. v. Commissioner of Service Tax, Vadodara [2015 (39) S.T.R. 487 (Tri.-Ahmd.)]. In re Jaybharat Automobiles Limited, the Tribunal held that "6.5 On the appeal by Revenue on the issue of incentives received by the appellant from the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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