Tribunal Rules Service Tax Not Applicable to Free Car Services

The Tribunal set aside the impugned order and allowed the appeal, following the precedent that Service Tax is not applicable to free services provided by authorized agencies for cars sold by them.

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Issues:
Service Tax on free service of cars by authorized service stations.

Analysis:
The appeal in this case arose from an Order-in-Appeal confirming Service Tax on the appellants for providing free service of cars under the category of "Authorized Service Station" for cars sold through their agencies. The Revenue contended that since the appellants received reimbursement for the services, Service Tax was leviable. However, the appellants argued that previous Commissionerates had dropped similar proceedings, and a previous Tribunal order had held that Service Tax is not applicable to free services provided by the assessee. The learned DR cited a Ministry circular stating that dealers selling vehicles through agencies and providing free service are not required to discharge Service Tax.

The appellants clarified that they did not receive any reimbursement for the free services provided by them in relation to the cars sold by them. They had discharged Service Tax for reimbursements received for free services of cars sold by other dealers. The Tribunal referred to a previous case where it was noted that unless evidence of reimbursement is shown, demands for Service Tax on free services are based on assumptions and presumptions. The Tribunal found no merit in the impugned orders and allowed the appeal based on the precedent that Service Tax is not leviable for free services provided by authorized agencies for cars sold by them.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, following the precedent that Service Tax is not applicable to free services provided by authorized agencies for cars sold by them.

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