TaxTMI 
TaxTMI 
2023 (8) TMI 409
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....anufactured by the appellants are sold to Authorized Dealers (dealers), who in turn sell the cars to the ultimate buyers. During the audit, it came to light that the appellant extended factory warranty to the ultimate customers for a period of two years from the sale of cars and after the completion of two years, the appellant canvases for purchase of extended warranty, scheduled plan and total maintenance plan which are optional in nature. On going through the records, it appeared to the department that the appellant is a service provider to the ultimate buyers of the cars as it is a contract between the appellant and the ultimate buyer of the car and the dealer is only a seller of the three plans as stated at para 8.1 below. Consequent to....
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....e said order, the appellant is now before the Tribunal. 3. No cross-objection has been filed by the respondent-department. 4. We have heard Shri Raghavan Ramabhadran, learned counsel for the appellant and Shri M. Ambe, learned Deputy Commissioner (AR) for the Revenue. 5. The learned counsel for the appellant submitted that the extended warranty plans are composite contracts involving labour by way of repairs and material by way of parts being replaced. Under the service tax regime, taxability on service tax portion of a composite works contract was made taxable for the first time w.e.f. 01.06.2007 vide insertion of Section 65(105)(zzzza). He placed reliance on the decision of the Hon'ble Apex Court in Commissioner v. Larsen & Toubro Ltd.....
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....Court in the case of Commissioner of Central Excise and Customs, Kerala and Others Vs. Larsen and Toubro Ltd. and Others [2015-TIOL-187-SC-ST] after elaborate discussion of the various provisions and judicial pronouncements in no ambiguous terms ruled that works contract cannot be subject to Service Tax before 01/06/2007. The question which remains is whether Service Tax is leviable on composite contract for maintenance and repair of vehicle which entails both supply of goods and services for the period from 01/06/2007 up to 01/07/2012, when the negative list of services was introduced. 8.1 The facts are that the appellant offers warranty for cars manufactured by them and sold to customers through their Authorized Dealers (dealers), who al....
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....r reimbursement of the value of the repairs and parts replaced. The appellant then reimburse the dealers for the claims so raised, inclusive of applicable Value Added Tax ('VAT') component on the parts replaced. The impugned order has demanded service tax on this transaction which is now under dispute before us. 8.2 Before we go forward a question arises as to whether the service of 'extended warranty' will be liable to tax under 'Repairs to Vehicle' service as per Section 106(65)(zo) which was introduced from 16/07/2001 or as a 'Works Contract'. As stated earlier, a contract which has both the elements of goods and service is a works contract. We find that the Hon'ble Apex Court in Commissioner Central Excise & Customs, Kerala vs. Larsen ....
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....contract in respect of roads, airports, railways, transport terminals, bridges, tunnels and dams. Explanation.- For the purposes of this sub-clause, "works contract" means a contract wherein,- (i) transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods, and (ii) such contract is for the purposes of carrying out,- (a) erection, commissioning or installation of plant, machinery, equipment or structures, whether pre-fabricated or otherwise, installation of electrical and electronic devices, plumbing, drain laying or other installations for transport of fluids, heating, ventilation or air-conditioning including related pipe work, duct work and sheet metal work, thermal insulation, sou....
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....ew Section 65B (Interpretations), among others, would be effective from 01/07/2012. Section 65B(54) defines 'works contract' as under; "works contract" means a contract wherein transfer of property in goods involved in the execution of such contract is leviable to tax as sale of goods and such contract is for the purpose of carrying out construction, erection, commissioning, installation, completion, fitting out, repair, maintenance, renovation, alteration of movable or immovable property or for carrying out any other similar activity or a part thereof in relation to such property; (emphasis added) It is seen from the above that after the insertion of section 65B(54) in the Finance Act 1994, from 01.07.2012 onwards, the definition of 'w....