Input service credit denied for pre-sale vehicle transport tied to dealer activity, not authorised service station function.
Freight service tax paid on transport of motor vehicles from the factory to the dealer's premises was not admissible as input service for the assessee's authorised service station activity. The assessee's dealer function and authorised service station function were distinct, and the transport of vehicles to the dealer premises related to the pre-sale dealer activity rather than post-sale servicing. A Board clarification supporting that distinction reinforced the view that the GTA service could not be linked to the authorised service station function. The credit claim therefore failed, and the demand and penalty order of the original authority stood restored.
Issues: Whether service tax paid on freight for transport of motor vehicles from the factory to the dealer's premises could be treated as input service for the assessee's authorized service station activity and used to sustain the credit taken.
Analysis: The assessee had dual roles, namely dealer of motor vehicles and authorized service station. The freight related to transport of vehicles to the dealer's premises was connected with the dealer function and not with the post-sale service function of the authorized service station. The Board's clarification treating the dealer's pre-sale or sale-stage activity as distinct from authorized service station activity supported this distinction. In that view, the freight-related GTA service could not qualify as input service for the authorized service station activity.
Conclusion: The credit was not admissible. The appeal by the Revenue succeeded and the order allowing the credit was set aside.
Final Conclusion: The demand and penalty order of the original authority stood restored, and the assessee's credit claim failed.
Ratio Decidendi: Services used for the dealer's pre-sale transportation of vehicles cannot be treated as input services for a distinct authorized service station activity.
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