TaxTMI 
TaxTMI 
2024 (8) TMI 204
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....ppellant and it was found that the appellant had collected certain amount from their customers as ' logistic charges' which is against the service of loading, unloading, upkeep and washing etc., of the car sold to the customer. It was alleged by the officers that the activity of logistic/handling services carried out by the appellant for the customer in lieu of a consideration constituted service as envisaged in clause 44 of Section 65(B) of Finance Act, 1994 and therefore, it is liable for levy service tax. The appellant paid an amount of Rs.19,64,254/- before the issuance of a show cause notice dated 09.02.2017. 2.2 The adjudicating authority held that providing logistics services by the car dealer to the customer is an activity which constituted service as defined under sub-section 44 of the section 65(B) of the Finance Act, 1994 and since it is not included in the value of cars sold, service tax is leviable on the same. The original adjudicating authority also held that though penalty under section 78 of the Finance Act and Section 70 of the Act read-with rule 7 and 4A of the Service Tax rules, 1994 are not applicable, penalty under section 77 of the Finance Act, 1994 is appli....
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....oods sold by the dealer. The manufacturer allows the dealer to collect the amount from the customer on account of these logistics/handling charges incurred by them and such collection is made at the time of the sale of the vehicle. The customers come into the picture only at the time of the sale and no service is provided to the customers at the time of incurring logistics charges. This legal position had been categorically clarified vide Circular No. 699/15/2003-CX dated 05-03-2003. The non-applicability of service tax on pre-delivery expenses incurred by a dealer of motor vehicles is confirmed in the following case law; * M/s Automotive Manufacturers Pvt. Ltd V/s CCE, Nagpur reported in 2015(38) STR-119. * M/s Indian Oil Corporation Ltd V/s CCE reported in 2015(38) STR-501. 4.1 It has been further submitted that the appellant had deposited the entire demand of service tax (almost 97% and 3% left out due to calculation mistake. In addition, it is pleaded that even if any demand was to be confirmed, it should have been restricted to normal period of one year as the adjudicating authority had observed in para 15 of the OIO that there is no mens-rea involved in the case. The fac....
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.... car sold to the customer. It has been alleged by the department that the activity of logistic/handling in lieu of a consideration constituted service as envisaged in clause 44 of Section 65(B) of Finance Act, 1994 and therefore, is liable for levy service tax. The adjudicating authority has held that providing logistics services by the car dealer to the customer is an activity which constituted service as defined under sub-section 44 of the section 65(B) of the Finance Act, 1994. In the instant case, it is noted that he appellant, as authorised dealer of cars, collected logistic charges/handling charges from their customers on account of the sales activity. These are pre-sales activity, the value of which is part of the value of the goods sold, and leviable to VAT. 8. In this context, for 1.4.2012-30.06.2024 (pre-negative list period), we note that the Tribunal in CCE v. Seva Automotives Private Limited [2007 (7) STR 276 (Mum-Trib)] held that "in view of the finding of the lower appellate authority that handling charges are in relation to sale and not in relation to any services provided by the respondents and further, prima facie, the revenue has not been able to show that the h....
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....e-sale stage or at the time of sale will not come under the purview of service tax." We are of the opinion that this circular has clearly clarified that such pre-sale charges are not leviable to service tax, and the logistics/handling activities are all pre-sale activities and hence are not leviable to service tax. 11. In this context, we also observe that the Tribunal in Indian Oil Corporation Ltd v. CCE 2015 (38) STR 501 (Tri. - Mumbai) held that "whatever expenses have been incurred before transfer of the goods, form part of the sale price of goods". Similar view was held by the coordinate bench of this Tribunal in M/S Premier Car Sales Ltd., Vs Commissioner (Audit), CGST & Central Excise, Lucknow [2024 (6) TMI 1 - CESTAT ALLAHABAD] has held as follows:- "15. Appellants had been recovering logistic charges from the buyers of the car. It is the case of the Department that the Appellants had not deposited service tax on such logistic charges. The learned Commissioner has held that the Appellants have charged the logistics charges over and above the ex-showroom price of car. If logistic charges were part of the transaction value, then it could have been included in the sale valu....