2015 (8) TMI 1247 - AT - Service Tax

Appeal dismissed: No service tax on free services provided by car dealers

The appeal filed by the Revenue against the Order-in-Appeal (OIA) related to service tax on free own services provided by dealers of M/s General Motors ... Service tax liability on free own services - authorised service station service - consideration received from manufacturer as determinant of taxability - taxable service rendered to a customerService tax liability on free own services - authorised service station service - consideration received from manufacturer as determinant of taxability - Whether the respondent is liable to pay service tax on free own services provided by dealers. - HELD THAT: - The Tribunal examined the scope of the 'authorised service station' service and emphasised that the liability to service tax arises in respect of a service rendered to a customer. Free services rendered to car buyers, who pay nothing, are services provided to the customers and not to the manufacturer. The record does not establish that dealers received any consideration from the manufacturer or that the manufacturer reimbursed amounts for such free services. In those circumstances, and applying the consistent view in the relied upon precedents, the demand of service tax in respect of the free own services is misconceived. The Tribunal therefore upheld the First Appellate Authority's conclusion that no service tax liability is attracted on the free services under the facts on record. [Paras 4, 5]Appeal dismissed and the order of the First Appellate Authority setting aside the confirmation of demand in respect of free own services is upheld.Final Conclusion: Revenue's appeal is dismissed; the demand of service tax on free own services provided by dealers is held to be misconceived on the facts, and the First Appellate Authority's order is affirmed. Issues:1. Whether the respondent is liable to pay service tax on free own services provided by the dealers.Analysis:The appeal was filed by the Revenue against the Order-in-Appeal (OIA) which set aside the confirmation of demand related to free own services provided by the dealers of M/s General Motors India Pvt. Ltd. The Revenue argued that service tax is payable where a service is provided by the dealers and consideration is received from the manufacturer, as per CBEC Circular No. 96/7/2007-ST. The respondent contended that no consideration was received for the free own services provided by the dealers. The First Appellate Authority relied on the case law of ASL Motors Pvt. Ltd. to hold that no service tax liability is attracted. The Revenue failed to establish whether any consideration was received by the dealers from the manufacturer or the buyers of vehicles.The case law of CCE, Indore vs. Jabalpur Motors Ltd. was cited, where it was clarified that the liability to service tax arises from the service provided to the customers. In the present case, free services were provided to the car buyers, and no amount was charged from them. It was noted that Maruti Udyog Ltd. explicitly stated that they did not reimburse any amount for such free services to the dealers. The free services were considered part of the dealers' duties, and they were entitled to the dealership commission. The services were rendered to the car buyers, not to the manufacturer, and the buyers did not pay for these services. Therefore, the demand for service tax was deemed misconceived. Additionally, the demand for service tax on the amount received for the salary of drivers of vans used for providing mobile services to the car owners was also rejected, as the customers were the car owners, not the manufacturer.Based on the above analysis and the principles established in the cited case laws, the appeal filed by the Revenue was dismissed by the Appellate Tribunal CESTAT ALLAHABAD.