TaxTMI 
TaxTMI 
TaxTMI 
2023 (6) TMI 243
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....also received amounts for the period 01.04.2008 - 31.03.2010 and for the period April 2010 to 31.03.2011 incentives from M/s. Maruti Udyog Ltd. The appellant had not discharged service tax on the incentives and the reimbursement expenses received by them. Show Cause Notice was issued proposing to demand Services Tax on the incentives received by them as well as the reimbursement of the advertisement charges. After due process of law, the Original Authority vide impugned order confirmed the demand along with interest and imposed penalty. Aggrieved by such order, the appellant is now before the Tribunal. 2. The Ld. Counsel Shri D. Jaishankar appeared and argued for the appellant. It is submitted that the appellant buys/purchases the car from M/s. Maruti Udyog Ltd., and the same is sold to the local buyers. At the time of purchase of cars the appellant makes full payment to M/s. Maruti Udyog Ltd. and the cars are delivered to the appellant by issuing Central Excise invoice wherein all Central Excise duties and sales tax are paid. In other words, the relationship with M/s. Maruti Udyog Ltd. being of buyer and seller on principal to principal basis, the incentives/discounts received by....
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....ssed. 6. Heard both sides. 7. The first issue is in regard to the demand of service tax on the incentives received by the appellant from the manufacturer for sale of cars. The definition of Business Auxiliary Services under Section 65 (19) of the Act ibid is reproduced as under: "Business Auxiliary Services" means:- any service in relation to - (i) Promotion or marketing or sale of goods produced or provided by or belonging to the client; or (ii) Promotion or marketing of service provided by the client; or (iii) Any customer care service provided on behalf of the client; or (iv) Procurement of goods or services which are inputs for the client; or Explanation. - For the removal of doubts, it is hereby declared that for the purposes of this sub-clause," input means all goods or services intended for use by ....
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....lant purchases vehicles form MUL and sells the same to the buyers. It is clear from the agreement that the appellant works on a principal to principal basis and not as an agent of MUL. This is for the reason that the agreement itself provides that the appellant has to undertake certain sales promotion activities as well. The carrying out of such activities by the appellant is for the mutual benefit of the business of the appellant as well as the business of MUL. The amount of incentives received on such account cannot, therefore, be treated as consideration for any service. The incentives received by the appellant cannot, therefore, leviable to service tax. 12. The Tribunal placed reliance on an earlier decision of the Tribunal in Tyota Lakozy Auto Pvt. Ltd. [2017 (52) STR 299 (Tri.- Mumbai)] and observed. "4. From a perusal of various case laws relied by the appellant, we note that the discounts/incentives received by the appellant form MUL cannot be made liable for payment of Service Tax under BAS, since the appellant is purchasing the cars from MUL on principal to principal basis and subsequently, reselling the same. 5. Revenue has ordered for payment of Service Tax under ....
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....sed on this count is unsustainable. Thus demand of interest under section 75 of the Act is also no sustainable." 15. The department, in the present cannot be permitted to take a different view. The service tax on the amount received form incentives could not, therefore, have been levied to service tax." 9. The Tribunal in the case of BM Autolink Vs Commissioner of Central Excise, Kutch (Supra) has taken similar view and set aside the demand of service tax on the incentives received for sale of cars. "4. We have carefully considered the submissions made by both the sides and perused the records. We find that the fact is not under dispute that the appellant being a dealer purchase the vehicles from M/s. Maruti Suzuki India Ltd. and subsequently sell the same to various customers. The transaction between M/s. Maruti Suzuki India Ltd. and the dealer and subsequently sale transaction between the dealer and the customers are purely on principal to principal basis. The vehicle manufacturer M/s. Maruti Suzuki India Ltd. on the basis of yearly performance of sale grants the discount to the dealer, this discount is nothing but a discount in the sale of value of the vehicle and throughou....