2015 (11) TMI 1114 - AT - Service Tax

Tribunal rules service station not liable for service tax on free servicing.

Chowgule Industries Pvt. Ltd. Versus Commissioner of Central Excise, Pune-III

The Tribunal ruled in favor of the appellant, a service station for Maruti Udyog Ltd., regarding the inclusion of amounts received for free servicing in ... Demand of service tax - authorized service station - whether the amount received by the appellant from Maruti Udyog Ltd. as dealers margin for can be considered as an amount received for free servicing undertaken by the appellant on behalf of Maruti Udyog Ltd. and the handling charges which have been recovered by the appellant from their customers would be includable in the taxable value for recovery of service tax - Held that:- Amounts received by the appellant are recorded by Maruti Udyog Ltd. as well as the appellant as dealers margin and the handling charges received by the appellant from the customers are shown in the invoices as charges and value added tax is paid on such amount. - entire case of the revenue is misdirected, in as much is the very same issue was in the case before the Tribunal in the case of Jabalpur Motors Ltd. (2015 (1) TMI 1140 - CESTAT NEW DELHI) - impugned order is unsustainable and liable to be set aside - Decided in favour of assessee. Issues:1. Whether the amount received by the appellant from Maruti Udyog Ltd. for free servicing and handling charges is includable in the taxable value for recovery of service tax.Analysis:The appellant, a service station for Maruti Udyog Ltd., provided free servicing during the warranty period and charged for services after the warranty period. Authorities concluded that the amount received for free servicing was taxable. Two show cause notices were issued, leading to confirmed demands, interest, and penalties. The first appellate authority rejected the appeal.The appellant argued that the amount received for free servicing and handling charges were included in customer invoices, contending they did not receive any direct payment for free services. They relied on a Tribunal judgment involving a similar issue with Maruti Udyog Ltd. The departmental representative supported the lower authorities' findings.The central issue was whether the amount received by the appellant from Maruti Udyog Ltd. as a dealer's margin and handling charges should be considered part of the taxable value for service tax. Both parties presented detailed arguments, with the appellant emphasizing the nature of transactions and reliance on precedent.The Tribunal noted that the revenue's case was misdirected, citing a previous judgment involving a similar issue with Maruti Udyog Ltd. The Tribunal analyzed the definition of an authorized service station and taxable services, concluding that the demand for service tax on free services and driver salary reimbursement was misconceived. The Tribunal found that the appellant's services were not rendered to Maruti Udyog Ltd., making the demands unsustainable.Based on the analysis and precedent, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant. The judgment highlighted the specific legal reasoning and applicability of the previous Tribunal decision to the current case, ultimately ruling in favor of the appellant.