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TMI Blog2024 (1) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... he appellant was providing output services under the category of 'Management, Maintenance or Repair Service' (MMR service for short) either under warranty period or under Annual Maintenance Contract (AMC). They procured parts and spares on which cenvat credit was availed. The appellants are discharging service tax on AMC service; however, no service tax was paid for services rendered during warranty period even though defective components were replaced and the cost of the said components charged from their overseas entities, who in-turn, recovered the cost of the same from the Original Equipment Manufacturer (OEM). Consequently, show-cause notices dated 30.09.2011 for the period April 2006 to March 2008 and dated 22.10.2013 for the period April 2008 to March 2013 were issued to the appellant for recovery of the service tax for services rendered during the warranty period even though no consideration was received from the service receivers but the value of the said services has been arrived at on the basis of Rule 3 of Service Tax (Determination of Value) Rules, 2006 read with Section 67 of the Finance Act, 1994 equivalent to spare parts value, replaced free of cost. On adjudication ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii. CST Vs. Bhayana Builders (P) Ltd. [2018(10) GSTL 118 (SC)] iii. Commissioner Vs. Larsen and Toubro Ltd. [2016(44) STR 391 (Guj.)] 3.3. Elaborating his argument, the learned advocate submitted that during warranty period services, the entire consideration is being received from the customers being included in the sale price of the goods and tax already paid on the sale of goods. Thus, the cost for providing warranty service is part of profit margin in the goods traded and has already suffered VAT. The same cannot be subjected to service tax by way of artificial segregation. In support, he has referred to the following judgments: i. CCE, Cochin Vs. Popular Mega Motors (India) Ltd. [2018(18) GSTL 219 (Ker.)] ii. My Car Pvt. Ltd. Vs. CCE, Kanpur [2015(40) STR 1018 (Tri. Del.)] iii.CCE, Indore Vs. Jabalpur Motors ltd. [2014(36) STR 1160 (Tri. Del.)] iv. CCE&C, Nashik Vs. Automotive Manufacturers Ltd. [2016(42) STR 448 (Tri. Mum.)] v. Indus Motor Company Vs. CCE, Cochin [2008(9) STR 18 (Tri. Bang.)] vi. ASL Motors Pvt. Ltd. Vs. CCE & ST, Patna [2008(9) STR 356 (Tri. Kolkata)] vii. Hindustan Auto House (P) Ltd. Vs. CCE, Jaipur [2009(13) STR 190 (Tri. Del.)] 3.4 Furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot correct as the Department has adopted the entire value attributable to the free warranty service in addition to the cost of materials and quantified the demand. Further he has submitted that during the provision of warranty service, the appellant released the replacement parts to replace the defective parts. The cost of such defective parts is reimbursed by the OEMs to the foreign companies, who in turn compensates the appellant. Thus, the entire transaction is relating to sales or purchase of components and is not for any service activity as alleged by the Department. He has submitted that the value of spare parts used for providing free warranty services cannot be included in the taxable value for service tax. In support, he has referred the decision in the case of TAFE Access Limited Vs. CGST&CE [2023(5) TMI 1154 - CESTAT Chennai]. 3.8. Further he has submitted that the appellant is eligible for cum-tax benefit. In support, he has referred the judgment of Hon'ble Supreme Court in the case of CCE, Delhi Vs. Maruti Udyog Ltd. [2002(141) ELT 3 (SC)]. 3.9. Further he has submitted that extended period of limitation cannot be invoked as the appellant has not suppressed any mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded his reasoning as follows:- 17.3. From the aforesaid provisions, it becomes clear that as per Rule 3 of the Service Tax (Determination of Value) Rules, 2006, the value determined by the service provider, in the instant case M/s. HP India, for the purpose of payment of service tax should not be less than the cost of provision of such services (emphasis supplied), and where the Central Excise Officer is not satisfied with the value adopted, he can verify the documents and records of the service provider in terms of Rule 4(1) ibid and issue a notice thereafter to the service provider demanding the service tax determined by him, as per law, in terms of Rule 4(2) ibid. Though no consideration was received towards provision of service within the warranty period, I hold that M/s. HP India are liable to pay service tax on such services rendered by them on the value determined in accordance with the provisions of Section 67 of the Finance Act, 1994 read with Rule 3 of the Service Tax (Determination of Value) Rules, 2006. Since consideration of taxable service provided should not be less than the cost of provisions of such service in terms of Rule 3 ibid, based on the cost of such spare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consideration and non-monetary consideration. In the present case, the Assessee has argued that they have not received any consideration. In such case it's for the department to prove that the Assessee's claim is wrong. It is observed that nowhere in the Show Cause Notice, attempt has been made to prove that the Assessee received either monetary or non-monetary consideration in any form. It is not alleged or proved in the Show Cause Notice as to how the Assessee got any benefit from their subsidiaries in monetary or non-monetary terms for the Corporate Guarantees issued. Missing this vital point, valuation of the consideration using provisions of Section 67(1) of the Finance Act, 1994 become a futile exercise." 6. Mr. Rai Chandani then read paragraphs 8 and 9 of the judgment of the Tribunal, which are extracted below:- "8. The criticality of 'consideration' for determination of service, as defined in section 65B (44) of Finance Act, 1994, for the disputed period after introduction of 'negative list' regime of taxation has been rightly construed by the adjudicating authority. Any activity must, for the purpose of taxability under Finance Act, 1994, not only, in relation to anoth ..... X X X X Extracts X X X X X X X X Extracts X X X X
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