2014 (3) TMI 944 - AT - Service Tax

CESTAT Chennai: Pre-deposit waiver & stay on service tax liability pending appeal; precedent reliance & discretion

The Appellate Tribunal CESTAT Chennai ruled in a case involving service tax liability where a motor car dealer provided free services to buyers and ... Waiver of pre-deposit - Service rendered to the vehicle owners from the manufacturer - Held that:- Following decision of M/s SEVA AUTOMOTIVE PVT LTD Versus CCE, NAGPUR [2013 (9) TMI 553 - CESTAT MUMBAI] - Stay granted. Issues:1. Whether service tax should be paid on the value inclusive of the value of goods in a case where a dealer of motor cars provides free services to buyers and charges for material used and services rendered to the manufacturer.Analysis:The judgment by the Appellate Tribunal CESTAT Chennai dealt with the issue of service tax liability in a scenario where a dealer of motor cars provided free services to buyers and charged for material used and services rendered to the manufacturer. The applicant had paid service tax on the value of services but not on the value of goods. The Revenue contended that service tax should be paid on the value inclusive of the goods. A demand was raised and confirmed for a specific period. The applicant cited precedents where the Tribunal had granted unconditional stays in similar matters.The Revenue argued that there was no sale of components in the present case, referring to a decision by the West Zonal Bench of the Tribunal in a related matter. The Tribunal noted a previous case involving M/s. Seva Automotive Pvt. Ltd. where a stay order was granted, and the matter was remanded. Following this precedent, the Tribunal granted a waiver of pre-deposit for admission of the appeal. The Tribunal decided to stay the collection of dues arising from the impugned order until the appeal was disposed of, indicating that the question of remitting the matter back would be addressed during the appeal hearing.This judgment provides clarity on the application of service tax in cases involving the provision of free services by dealers and the charging of material costs. It underscores the importance of precedents in determining tax liabilities and the Tribunal's discretion in granting stays and waivers pending appeal hearings. The decision to stay the collection of dues reflects a balanced approach to ensure fairness and justice in tax matters.