TaxTMI 
TaxTMI 
2024 (10) TMI 901
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....ormed about the on-going incentives/discount schemes such as special incentive, discount scheme, target scheme, additional scheme, sales target incentive etc. where under the Appellants upon stratifying the eligibility criterion for the on-going schemes used to received additional discounts/incentives on post-sales basis from TML. The aforesaid incentives being in nature of "trade discounts/ incentives" were offered post the sales of vehicle by TML, the Appellants used to record the same in a separate account named as "Trade discounts & Incentives". 1.2 During the course of EA-2000 Audit conducted by the department, the records of the Appellants for the relevant period were scrutinized and it was pointed out that Appellants have received certain amounts under different schemes form TML, which are exigible to the levy of service tax. However, no service tax has been discharged by the Appellants on the said income. 1.3 As a direct outcome of the aforesaid audit, a show cause notice was issued to the Appellants alleging that with effect from 01.07.2012 every activity for a consideration by any period for another shall be liable to service tax unless excluded under the negative....
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....g Authority has confirmed the demand of service tax in respect of all incentives/reimbursements received by the Appellant from TML during the relevant period. At the outset, it is submitted that though commercially, the amounts received by the Appellant are termed as "incentives", all such amounts are extended by TML by way of price reduction against the supplies made by it to the Appellant. In other words, the incentives, which are received by the Appellant, are actually discounts in purchase price, extended vide credit notes issued by TML, by way of various schemes on the products purchased by the Appellant from TML. 2.1 On perusal of the relevant terms of the dealership agreement between, the following facts emerge - a) That the Appellant and TML are working on "Principal to Principal" basis and the Appellant does not act "for or on behalf of" TML. b) That the Appellant is buying "Products", viz., Vehicles, Spare Parts, Accessories from TML for further sale to its own customers. c) That the Appellant shall advertise and/or promote Products & Services orfacilities in a manner so as to secure adequate and effective publicity to the satisfaction of TML at its own expense. ....
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....on value of all services except for the services specified in the negative list. 2.5 Section 65B (44) of the Finance Act defines the term "service" to mean any activity carried out by one person for another for consideration, including a declared service. Section 65B (44) is extracted hereunder for ready reference: "65B (44) - "service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include: (a) an activity which constitutes merely; (i) a transfer of title in goods or immovable property, by way of sale, gift orin any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution; (iii) a transaction in money or actionable claim; (b) a provision of service by an employee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the timebeing in force." From a bare perusal of the above definition of "service", it is clear that for any transaction to qualify as a service, the following ingredients must be satisfied....
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....nt that there is absence of any mala fide intent and that the ingredients of fraud, willful misstatement and suppression of facts is not present in the Appellant"s case. However, the Department has failed to even make proper allegations to substantiate their case against the Appellant regarding presence of any malafides. Therefore, on this account, the extended period of limitation cannot be invoked. He also placed reliance on the following judgments:- * Government of India vs. Madras Rubber Factory Ltd., 1995 (77) E.L.T. 433 (SC) * Union of India & Others vs. Bombay Tyres International Pvt. Ltd., 1984 (17) E.L.T. 329 (S.C.) * M/s Addison & Co. Ltd. vs. CCE, (1977) 5 SCC 763, * DCCT, Corporate Division vs. M.R.F. Ltd, [2008] 14 VST 124 (WBTT) * Godavari Fertilizers and Chemicals Ltd. vs. Commissioner of Commercial Taxes, (2004) 138 STC 133 * M/s Philips India Ltd vs. Collector of Central Excise, Pune, 1997 (91) E.L.T. 540 (S.C.) * M/s Mormugao Port Trust vs. Commissioner of Cus., C. Ex. & S.T., Goa, 2017 (48) S.T.R. 69 (Tri. - Mumbai) * Commissioner vs. Mormugao Port Trust, 2018 (19) G.S.T.L. J118 (S.C.) * CST, Mumbai-I vs. Sai Service Station Ltd, 2014 (35) S.T.R....
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....ings of the impugned order. 4. We have carefully considered the submissions made by both the sides and perused the records. We find that the Revenue has demanded the service tax on the trade discount given by M/s. TATA Motors Limited to its buyer i.e. the appellant. This transaction is purely a sale purchase transaction. The appellant have not provided any service against the amount of trade discount. The trade discount is deducted from the sale value of the goods. Therefore, the entire transaction between the appellant and M/s. TATA Motors Ltd is purchase and sale of the cars. This Tribunal time and again clearly held that since the discount/ incentive given by the car manufacturer to its dealer in the course of the sale of the car to the dealer is not amount to any service. Therefore, consequently no service tax is payable. Even for the period post negative list regime in the Finance Act, 1944, the sale of goods by way of transfer of title of goods is excluded from the service. The relevant part of definition of service provided under 65 B (44) is reproduced below:- "65B (44) - "service" means any activity carried out by a person for another for consideration, and includes a d....
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....t Ltd. to the appellant and from the appellant to the customers, the transaction is clearly of purchase and sell of the vehicles. To ascertain that the transactions are of purchase and sale, the sample invoice from M/s Toyota Kirloskar Motors Pvt Ltd. to appellant and corresponding invoice from appellant to the ultimate customer are scanned below: * Purchased invoice in respect of vehicles sold by M/s. Toyota Kirloskar Motors Pvt. Ltd. to the appellant M/s. Infinium Motors Guj Pvt Ltd : * Invoice for sale of above vehicles by the appellant M/s Infinium Motors Pvt Ltd to their customers: From the above invoices, it is clear that transaction between M/s. Toyota Kirloskar Motors Pvt Ltd., and the appellant is of purchase and sale of the vehicles on principal to principal basis and in turn the same vehicle purchased by the appellant was sold by the appellant to the customers on principal to principal basis and not on behalf of M/s Toyota Kirloskar Motors Pvt Ltd. Therefore, the appellant in this transactions is not an agent of M/s. Toyota Kirloskar Motors Pvt Ltd but a buyer of goods. In the course of this trading activities the seller M/s Toyota Kirloskar Motors Pvt Ltd. gives ....
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....umbai) "6.5 On the appeal by Revenue on the issue of incentives received by the appellant from the car dealer, we find that the relationship between the appellant and the dealer is on a principal to principal basis. Only because some incentives/discounts are received by the appellant under various schemes of the manufacturer cannot lead to the conclusion that the incentive is received for promotion and marketing of goods. It is not material under what head the incentives are shown in the Ledgers, what is relevant is the nature of the transaction which is of sale. All manufacturers provide discount schemes to dealers. Such transactions cannot fall under the service category of Business Auxiliary Service when it is a normal market practice to offer discounts/institutions to the dealers. The issue is settled in the case of Sai Service Station (supra). Therefore, we reject the appeal of the department." * Rohan Motors Ltd. V/s. CCE, Dehracun- 2021(45) GSTL 315 (Tri.- Del.) "10. As noticed above, the appellant purchases vehicles from 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 o....
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....from the manufacturer further sold to various traders. A copy of the sale invoice issued by the appellant is scanned below : From the above invoice it can be seen that it is clearly a sale invoice under which the appellant also paid the VAT. This shows that the transaction from the manufacturer to the appellant and subsequent from appellant to the individual traders are clearly sale transactions. Hence no service is involved. As per the above facts, we are of the clear view that a trading margin cannot be subject matter of levy of service tax. Accordingly, the impugned order is set aside and the appeal is allowed." From the above judgments, it is evident that the fact of the present case and that of the cases cited above as well as the nature of transactions i.e. purchase and sale of the goods are identical and it was consistently held that any incentive/discount given by the motor vehicle manufacturer as a seller of vehicle to the dealer as purchaser of the vehicle will not amount to Commission under Business Auxiliary Service. Therefore, the same being not consideration of any service shall not be liable to Service Tax. Following the above judgments and discussion made by us....
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....like telephone, advertisement, renting, insurance, banking, maintenance and repair, courier, security and other financial services under the provision of Cenvat Credit Rules. They were availing the Cenvat credit on all these input services. From the premises, where they are providing the taxable service, they were also carrying out the sale of cars, which was liable for Service Tax. The Department was of the view that since the respondent did not maintain separate accounts for the input services used towards the taxable activity as well as exempted activity, the respondent will be required to pay an amount in terms of Rule 6(3A) of the Cenvat Credit Rules. In this connection, Department was of the view that the activity of trading, which was also carried out by the appellant from the same premises, in addition to carrying out the service of authorized service for four wheelers, is to be considered as an exempted service but both the authorities below dropped the demand and, hence, the Revenue is in appeal before us. 3. With the above background, we heard Shri Amresh Jain, Learned DR for Revenue and Shri Milind Sharma Learned C.A. for assessee. The Learned DR submitted that the ac....
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....ur operator service. Apart from providing the taxable services, the appellant also engaged in the trading activities. Since Cenvat credit taken on common input services were used for providing both taxable service as well as for the services relating to the trading activity, the Department disallowed the Cenvat credit under Rule 14 of the Rules on the ground that trading activity should be considered as exempted service in terms of Rule 2(e) of the Rules, and as such, the appellant is required to maintain separate account or pay the amount towards provision of service on the trading activity [In terms of Rule 6(3)(A) of the Rules]. The adjudication order dated 15-3-2012 passed in confirming the demand, culminated in the impugned order dated 16-4-2013. Hence this present appeal is before the Tribunal. 3. The term "exempted services" has been defined in Rule 2(e) of the Rules to mean taxable services which are exempted from the whole of the service tax leviable thereon, and include services on which no service tax is leviable under Section 66 of the Finance Act. The definition of exempted service was amended vide Notification No. 3/2011-C.E. (N.T.), dated 1-3- 2011. The effect of t....