AI Drafter - (New and Powerful) 
Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter. 
TaxTMI 
TaxTMI 
2019 (10) TMI 587
X X X X Extracts X X X X
X X X X Extracts X X X X
..../2013 60721/2013 Period of Dispute April 2008 to March 2009 April 2010 to March 2011 April 2011 to September 2011 October 2011 to June 2012 Show Cause Notice 22 October 2009 13 December 2011 27 September 2012 31 March 2013 Impugned Order 24 October 2010 31 March 2011 29 July 2013 29 July 2013 Service Tax Demand Rs. 79,86,402/-- Rs. 1,00,31,399/- Rs. 48,82,097/- towards value of spare parts Rs. 85,50,873/- towards value of spare parts CENVAT CREDIT DENIED Rs. 11,10,059/- Rs. 5,17,266/- --- --- 3. The following five issues have been dealt with in the orders impugned in the aforesaid four appeals; (A) Disallowance of inadmissible Cenvat Credit of service tax availed against several activities not qualifying as input services (except in ST/60271/2013 and ST/60272/2013). (B) Inclusion of the value of spare parts/ consumables utilized during the course of provision of services in the capacity of 'Authorised Service Station' in the gross value. (C) Demand of service tax on the amount received by the Appellant against the warranty charges received by the Appellant from M/s Toyota Kir....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., the repair and maintenance of audio system is an integral part of servicing of the cars and the clause pertaining to servicing, comprises the servicing part and also repair of the audio sets. The Appellant, therefore, contends that this service is directly linked to the output service of authorised service station. (ii). Learned Authorised Representative of the Department has however supported the impugned order. (iii). This issue was examined in the Appellant's own case in M/s Uttam Toyota Vs. Commissioner of Central Excise, Ghaziabad ^Appeal No. ST/1094/2010-CU (DB) Appeal No. ST/57/2012-CU (DB) decided by common order no. 27.12.2018. that was decided on 27 December 2018. The relevant portion of the order is reproduced below; "(a) The credit sought to be denied on the above services on the ground that these services has no nexus with manufacturing activities of the Appellant, therefore, they do not qualify as input service as per Rule 2(I) of Cenvat Credit Rules, 2004. We have seen that the credit cannot be denied to the Appellant as all these services has been availed by the appellant in the course of their business of manufacturing in terms of the deci....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s since any failure in the pollution standards in the automobiles serviced by the Appellant could result in penalties being imposed. In fact, the automobiles serviced by the Appellant have to carry a certificate that the vehicle is not emitting pollutance beyond the prescribed limited. Thus, this is part and parcel of the service activity carried out by the Appellant and hence, an output. It is, therefore, submitted that the Appellant would be entitled to take credit on the pollution equipment that are procured from M/s AVL India Pvt. Ltd. (iii). The only reason why this Cenvat Credit been denied to the Appellant is that it was not contested in reply to the show cause notice and the invoices had also not been submitted. This is apparently incorrect because not only had the Appellant contested this issue but had also enclosed the invoices. The procurement of the pollution equipment purchased by the Appellant is essential for provision of output service and therefore, the Appellant is entitled to take the credit. 9. SMS Service Campaign (ST/59279/2013) (i). The Appellant contends that the SMS service campaign was used by the Appellant for advertisement of its Authorised Serv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ce was utilised in the provisions of output service. In the instant case as can be seen from the order of the Adjudicating Authority the receipt of the service, its utilisation and payment for the service are clearly established from the records maintained by the party and produced before the Adjudicating Authority. Therefore, in deference to the judgment cited above, I am of the view that the Appellant is eligible for the amount of service tax credit and consequent refund in respect thereof. (Emphasis supplied)." (iv). In view of the aforesaid decision of the Tribunal, the Adjudicating Authority could not have denied credit only for the reason that the invoices issued by the service providers did not contain the registration number. 11. Mobile Phone Services (i). Credit for mobile phone services has been denied to the Appellant for the reason that the invoices against which credit was availed, were raised upon individual users of mobile phones (employees of the Appellant) and not the Appellant. In ST Appeal No. 9959/2013, the Adjudicating Authority has denied the credit on the ground that the said service was utilised by employees of different Departments of the Appellant....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the ground that it is for personal use of the employee and the bill for such telecommunication service is in the name of the employee, therefore, it cannot be said to have been used by the Appellant. I do not agree with this contention of the Learned Commissioner for the simple reason that normally telephone or mobile is issued in the individual name but the fact is not under dispute that telephone bill bearing name of the Appellant also. Most important part is that the bill is paid by the Appellant and the same has been booked as expenditure by the Appellant, therefore, it cannot be said that the service of telecommunication has been used for business activity of the Appellant. Needless to say that business activity is export of software technology service to the foreign country, therefore, in my considered view the telephone services is input service used for output service exported, in particular, when the Revenue could not establish with any evidence that the telephone/ mobile has been used by the employee for their personal use. (vi) It will also be useful to refer to the decision of the Tribunal in Telenet System Pvt. Ltd. Vs. Commissioner of Central Excise, Belapur 2012 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....enied on the aforesaid services by the Adjudicating Authority for the reason that it was not clear whether the same had been used for the Ghaziabad unit where the Appellant provides its output service or at some other place. Learned Counsel for the Appellant has submitted that this issue has been decided in the favour of the Appellant in the earlier Appeal decided by the Tribunal by order dated 27 December, 2018. (ii). The invoices pertaining to the said services which have been annexed in the paper book of ST Appeal No. 59279 of 2013 clearly show the name and address of the Appellant and the place of provision of the said service. Even otherwise, the issue has been settled in favour of the Appellant in the earlier Appeal decided on 27 December 2018. The relevant portion of the order has been reproduced above. (iii). The Appellant is therefore, clearly entitled to the Cenvat Credit. 13. Consultancy Services (i). It is contended by learned Counsel for the Appellant that the Appellant operates Dealership and Service Station from the same premises and the service was obtained by the Appellant for its entire premises including the service portion. It is, therefore, his subm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....THE SPARE PARTS IN THE CROSS-VALUE. (i). It is pointed out by learned Counsel for the Appellant that while providing "Authorised Service Station Service", the Appellant is required to replace components or spare parts. The impugned order confirms service tax demand on the spare parts sold in the course of providing this service. (ii) It is submitted that this is a sale transaction against which the Appellant has charged VAT. This would be clear from a perusal of the invoices wherein the Appellant has separately shown the value of the parts and the value of the labour charges. It also indicates the service tax paid on the labour charges. It is for this reason that it is submitted that levy of service tax on the portion attributable to spare parts sold during the service of the vehicle is bad in law and liable to be set aside. (iii) Reliance has been placed on the Circular dated 23 August 2007 issued by the Department containing a clarification that service tax is not leviable on a transaction treated as sale of goods and subject to levy of VAT. (iv) It is also submitted that issue has been decided in favour of the Appellant in the earlier Appeal decided on 27 December 20....
X X X X Extracts X X X X
X X X X Extracts X X X X
....is issue stands cover in favour of the Appellant in the earlier Appeal filed by the Appellant which was decided on 27 December 2018 after placing reliance on the aforesaid Circular dated 23 August 2007. The leviability of service tax on this head, therefore, has to be set aside. 20. The fourth issue dealt with in the impugned orders relates to commission received from banks. (D) 21. APPELLANT IS NOT LIABLE TO PAY SERVICE TAX ON COMMISSION RECEIVED FROM BANKS. (i). This demand has been confirmed under "Business Auxiliary Service". It is contended by the Appellant that it has not provided any service in the nature of "Business Auxiliary Service" to the banks. In this connection, it is pointed out that the Appellant does not have any agreement with the banks to act as their agents. They are only carrying out functions like collecting forms from the customers desirous of purchasing vehicle on loan and then forwarding the forms to the banks after getting the papers signed by the customers, for which activity some amount is paid by the banks to the Appellant. The Appellant claims that it is not doing any activity of promoting or marketing on behalf of the banks. In support of....