Service tax demand on rebate from Suzuki Japan set aside, Cenvat Credit allowed on advertisement expenses

CESTAT Chandigarh set aside the service tax demand on rebate/subsidy received from Suzuki Japan and allowed Cenvat Credit on reimbursable advertisement expenses. The tribunal held that since identical issues for previous periods (2006-07 and 2007-08) were already decided in appellant's favor in their own case, which attained finality, the department cannot take contrary stands in pending appeals regarding the same assessee. Following precedents in SRF Ltd. and Rosmerta Technologies Ltd., the tribunal ruled the issue was no longer res integra and stood settled in appellant's favor. The impugned order was set aside with consequential relief.

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Issues Involved:
1. Service Tax on Business Support Services
2. Denial of Cenvat Credit on advertisement expenses
3. Short payment of service tax

Summary:

1. Service Tax on Business Support Services:
The appellant contested the demand of service tax on Business Support Services amounting to Rs. 65,70,258/-. The appellant argued that the subsidy/rebate provided by Suzuki Japan was to compensate for the difficulty in selling expensive bikes in India and did not constitute a provision of service. The Tribunal cited previous rulings in the appellant's favor, including the case of *Balaji Enterprises vs. Commissioner of CE & ST, Jaipur-I - 2020 (33) G.S.T.L. 97 (Tri.-Del.)*, which held that price rebates do not amount to the provision of any service. The Tribunal concluded that the rebate is a discount on the purchase price and not consideration for any service, thus not leviable to service tax.

2. Denial of Cenvat Credit on Advertisement Expenses:
The appellant challenged the denial of Cenvat Credit on advertisement expenses reimbursed by Suzuki Japan, amounting to Rs. 6,21,90,039/-. The appellant argued that the advertisement services qualify as 'input services' u/r 2(l) of the Cenvat Credit Rules, 2004, and the reimbursement by Suzuki Japan does not affect the entitlement to credit. The Tribunal referenced its previous decision in the appellant's own case for the period 2006-07 and 2007-08, which had attained finality and was not appealed by the Department. It was held that reimbursement of part cost of advertising expenses does not disentitle the appellant to the credit of service tax paid.

3. Short Payment of Service Tax:
The appellant was accused of short-paying service tax by Rs. 85,841/-. The Tribunal found that the issue had already been settled in favor of the appellant for the previous and subsequent periods, and the Department had accepted the rulings. The Tribunal emphasized that the Department cannot take contrary stands on the same issue for the same assessee.

Conclusion:
The Tribunal set aside the impugned order, which confirmed the demand of service tax and denial of Cenvat Credit, and allowed the appeal with consequential relief. The Tribunal reiterated that the issues were already settled in favor of the appellant for previous and subsequent periods, and the Department had not challenged those decisions. The judgment emphasized the principle that the Department cannot take inconsistent positions in proceedings involving the same issues for the same assessee.

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