Tribunal dismisses Revenue's appeal on service tax for free services under warranty period

The Tribunal upheld the impugned order, dismissing the Revenue's appeal regarding the leviability of service tax on free services provided by the respondent under warranty period. The Tribunal concluded that while the transaction between the two dealers could potentially be subject to tax, the service provided to the customer was not separately charged, as its value was already included in the dealer's margin. The Tribunal relied on similar cases and emphasized that the agreement between the dealers did not impact the service provided to the customer.

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Issues: Leviability of service tax on free services provided by the respondent under warranty period.

In this case, the issue revolves around the leviability of service tax on three free services provided by the respondent, who is an authorized dealer of M/s. Maruti Udyog Ltd. The respondent does not recover service charges from customers, as these charges are included in the dealer's margin provided by the manufacturer. The Tribunal judgments in similar cases have been relied upon by the respondent to support their position. The Revenue, however, argues that the agreement between M/s. Maruti Udyog Ltd. and the respondent clearly indicates a definite value for the services provided, as the Selling Dealer is obligated to pay for free services provided by another dealer. The Tribunal, after considering both sides' submissions, concludes that the agreement between the two dealers regarding payment for services rendered by the Servicing Dealer does not impact the service provided by the Selling Dealer to the customer. The Tribunal emphasizes that the value of services is already included in the dealer's margin, and no separate service charge is received from the customer. Therefore, the transaction between the two dealers could potentially be subject to tax, but not the service provided to the customer. The Tribunal upholds the impugned order and dismisses the appeal of the Revenue, citing that the judgments referred to by the respondent apply squarely to the facts of the present case.

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