2023 (11) TMI 307 - AT - Service Tax

Tribunal Overturns Service Tax Demand on Incentives, Rules They Relate to Goods Purchases, Not Services.

The Tribunal allowed the appeal, setting aside the Commissioner's order dated 30.11.2015, which demanded Service Tax, interest, and penalties from the ... Levy of Service Tax - Business Auxiliary Service or not - amount received by it as incentive in respect of sale of goods - HELD THAT:- It is noticed that Learned Commissioner had distinguished the ratio of M/s Sai Service Station Ltd., [2013 (10) TMI 1155 - CESTAT MUMBAI] in stating that in that case incentives were paid in connection with sale of excisable goods by the manufacturer to the dealer which were held as ‘trade discount’ but the same is not the situation in case of the present Appellant. Such an observation appears to be erroneous for the reason that in the summary of the incentive received, which is annexed to the notice under Sec 73 (1A), clearly indicates that against purchase of 4 items namely vehicles and it’s components, incentives were given to the Appellant and the same can’t be considered as paid against any service since paid against sale of goods. The order passed by the Commissioner in Order-in-Original is hereby set aside with consequential relief, if any - Appeal allowed. Issues involved: Conformation of Service Tax demand against the Appellant for incentive received in connection with sale of goods under the heading 'Business Auxiliary Service'.Summary:The Appellant, a dealer of M/s Tata Motors, received incentives from the manufacturer but did not pay Service Tax on the incentive amount. The Commissioner issued show cause notices for the demand of Service Tax, interest, and penalties. The appeal pertains to the period from 1.04.2013 to 31.03.2014.During the appeal hearing, the Appellant's Chartered Accountant cited previous Tribunal decisions in favor of the Appellant, arguing that the demand should be set aside based on earlier judgments. The Respondent's Authorized Representative supported the Commissioner's order, highlighting the distinction in the nature of incentives received by the Appellant compared to previous cases.Upon reviewing the case record and judgments, the Tribunal found that the incentives received by the Appellant were against the purchase of goods and not for any service provided. The Tribunal noted an error in the Commissioner's observation and decided to set aside the Commissioner's order for consistency with previous Tribunal decisions.The Order:The Tribunal allowed the appeal, setting aside the Commissioner's order dated 30.11.2015, with consequential relief, if any. The order was pronounced in the open court on 16.10.2023.