Service tax valuation excludes sales incentives and separately billed spare parts used in vehicle servicing.

Incentives received for achieving sales targets were treated as outside the taxable value of services, and the separately billed value of spare parts, lubricants and accessories sold during vehicle servicing was also excluded from service tax valuation. On that basis, the demand and penalties were held unsustainable because the same issue had already been decided in the assessee's own case, making the matter no longer res integra. The impugned order was set aside and the appeal was allowed with consequential relief according to law.

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Issues: Whether the service tax demand and penalties on incentives received from the manufacturer and on the value attributable to sale of spare parts and accessories in the course of vehicle servicing were sustainable.

Analysis: The disputed demand was found to be covered by the Tribunal's earlier decision in the assessee's own case, which had already held that incentives received for achieving targeted sales did not constitute taxable service value and that the value of spare parts, lubricants and accessories sold separately during repair or maintenance could not be added to the value of services. On that basis, the present demand was treated as no longer res integra and the impugned order was held unsustainable.

Conclusion: The demand and penalties were not sustainable and the assessee succeeded on the substantive tax issues.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief according to law.

Ratio Decidendi: Incentives received for achieving sales targets and the separately billed value of goods used or sold in servicing do not form part of the taxable value of services.

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