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of <h1>Tribunal Waives Pre-Deposit for Tax Dispute, Grants Appeal Stay</h1> <h3>Coimbatore Anamallais Agencies Pvt. Ltd. Versus Commissioner of Service Tax, Coimbatore</h3> Coimbatore Anamallais Agencies Pvt. Ltd. Versus Commissioner of Service Tax, Coimbatore - TMI Issues:Interpretation of Service Tax Valuation Rules regarding reimbursement of expenses, applicability of exemption under Notification No.12/03-ST, determination of sale of goods in the context of free service provided during warranty period.Analysis:The judgment addresses a dispute involving the service tax liability of an authorized agent selling vehicles manufactured by a company and providing free service during the warranty period. The Revenue claimed that the agent should pay service tax on the value of goods used during the free service, in addition to the service value. The applicant argued that the reimbursement received for the parts used should not be considered part of the taxable service value as per Rule 5 of the Service Tax Valuation Rules. The counsel cited a case where a similar rule was struck down by the Delhi High Court and a precedent where waiver of pre-deposit was granted on the same issue.Regarding the applicability of the exemption under Notification No.12/03-ST, the Revenue contended that no sale of goods was involved in the transaction. The Revenue relied on a previous decision to support their argument. However, the Tribunal analyzed the situation and concluded that the service provided, commonly known as free service, was not truly free as the manufacturer paid for both services and parts, benefiting both the vehicle owner and the manufacturer. The Tribunal determined that there was indeed a sale of goods in this case, making the applicant eligible for the exemption under the notification.In light of the arguments presented and the precedents cited, the Tribunal granted a waiver of pre-deposit for the disputed tax amount and penalty. The Tribunal allowed the appeal and stayed the collection of dues during the pendency of the appeal. The judgment highlighted the commercial aspects of the transaction, emphasizing the mutual benefits derived by the manufacturer, the agent, and the vehicle owner, leading to the conclusion that the exemption under Notification No.12/03-ST was applicable in this case.
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