TaxTMI 
TaxTMI 
2020 (1) TMI 96
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....Appellant was confirmed with interest and penalty and a penalty of Rs. 1,00,000/- was imposed upon the Managing Director of the Appellant. 3. The Appellant is a dealer of Maruti Udyog Ltd. The main business of the Appellant is to sell motor vehicles manufactured by Maruti Udyog Ltd. The Appellant collected "handling/ logistic charges", from the customers, over and above the ex-show-room vehicle price. It is the collection of this charge which is in dispute in this Appeal. According to the Appellant, the handling charges/ logistic charges range from Rs. 2500/- to Rs. 5500/- inclusive of VAT and such amount covers expenses like transportation charges to bring the vehicle from the stockyard to the show-room, maintenance and upkeep, initial supply of petrol/ diesel for bringing the vehicle for starting and the movement of the vehicle till the final delivery at the time of sale. The Appellant disclosed this amount separately in the bills issued at the time of sale of the vehicle. The Appellant collected Rs. 7,17,12,175/- as handling/ logistic charges and paid an amount of Rs. 1,07,56,826/- as VAT for this amount. The details are as follows; Year Logistic Charges/ Handling Charg....
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....015] 63 taxmann.com236 (Mumbai-CESTAT). The Joint Commissioner however, did not accept the contention of the Appellant and confirmed the demand with penalty and interest. 6. Feeling aggrieved, an Appeal was filed by the Appellant before the Commissioner (Appeals), which was dismissed by order dated 28 May 2019. The relevant observations of the Commissioner (Appeals) are reproduced below: "But in the instant matter, there is no such situation and the logistic charge has been collected separately towards the movement of vehicle from stock yard to show room, maintenance and upkeep, preservation of vehicle, initially filling of petrol/ diesel for starting and movement of the vehicle till final delivery etc. These activities undertaken by the Appellant are very much come under the ambit of definition of "service". The contention of the Appellant that they charge "logistic charges" in connection with procurement of goods which were included in value of goods, is also not sustainable on the reasons that if the "logistic charges" are includible in the value of goods for the purpose of payment of VAT then why the same was charged separately in the invoices in addition to the pri....
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....s. 7,17,12,175/- from July 2012 up to August 2015 and paid VAT to the extent of Rs. 1,07,56,826/- as per the prevailing VAT rate of 15%; and (v) To support the contention, reliance has been placed upon a decision of the Mumbai Tribunal in Automative Manufacturers (P.) Ltd. 9. Shri Vivek Pandey learned Authorised Representative of the Department has, however, supported the impugned order and has submitted that: (i) The Appellant had rendered a taxable service under the Finance Act, and so payment of VAT would not absolve the Appellant from its liability to pay service tax; (ii) In support of this contention, reliance has been placed upon the decisions of the Supreme Court in Bharat Sanchar Nigam Ltd. Vs Union of India 2006 (2) S.T.R. 161 (S.C.), Idea Mobile Communication Ltd. Vs Commissioner of Central Excise & Customs, Cochin 2011 (23) S.T.R. 433(S.C.) and Commissioner of Central Excise & Customs, Kerala Vs Larsen & Toubro Ltd 2015 (39) S.T.R. 913(S.C.). 10. The submissions advanced by learned Counsel for the Appellant and the learned Authorised Representative for the Department have been considered. 11. The issue that arises for the consideratio....
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....i Udyog Ltd. and are registered with the department as an authorized service station for Maruti cars and they have been discharging/ Service Tax liability on servicing/ repairing of the vehicles undertaken by them. While repairing or servicing of the vehicles, they also sometimes used parts on which sales tax/ VAT liability is discharged. The parts and components are procured from M/s. Maruti Udyog Ltd and they have lifted these parts from the warehouse/ depots of Maruti Udyog Ltd. For bringing these parts into their service station, they have to incur octroi and other local taxes, freight, loading and unloading charges etc. Therefore, while selling these parts to the clients as part of servicing activity, they include the cost incurred by them towards freight, loading, unloading, etc., as 'handling charges' and pay sales tax on the goods on the value inclusive of handling charges. Sometimes they sell the parts as such without undertaking any service/repair activity and in such cases also they collect handling charges and discharge the sales tax liability. The present demand is in respect of handling charges collected by the Appellant as part of the value of the goods when a compos....
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....also support this view." [emphasis supplied] 14. On a consideration of the factual position before the Mumbai Tribunal in Automative Manufacturers and the present Appeal, it would be seen that they are basically the same. Thus, the decision of the Tribunal in Automative Manufacturers (P.) Ltd would conclude the controversy in favour of the Appellant. Automative Manufacturers (P) Ltd. were collecting handling for the parts procured from the warehouse, while the Appellant is charging handling cost for the charges incurred in bringing the vehicles from the warehouse to the showroom. The sale invoices in both the cases include in the said charges. 15. Learned Authorised Representative of the Department has, however, placed reliance upon the decisions of the Supreme Court in Bharat Sanchar Nigam Ltd, Idea Mobile Communication and Larsen & Toubro Ltd. These decisions would not come to the aid of the Department. In Bharat Sanchar Nigam Ltd, the issue was regarding the nature of the transaction by which mobile phone connections were enjoyed. The Supreme Court examined whether it was a sale or a service or both. It is in this context that the Supreme Court observed in paragraph 80:....