TaxTMI 
TaxTMI 
2024 (11) TMI 667
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....as authorised dealers by M/s Maruti Suzuki India Private Limited ('MSIL') for its four- wheelers ('vehicles') and their spare parts ('parts') in the State of Gujarat. The Appellant I & II executed dealership agreement with MSIL vide Dealership Agreement dated January 1, 2019 and January 1, 2016 respectively. 1.2. Nanavati Cars Private Limited ('Appellant III') is inter-alia appointed as authorised dealer by M/s Renault India Private Limited ('RIPL') for its vehicles and their parts in the State of Gujarat. The Appellant III executed dealership agreement with RIPL vide Dealership Agreement dated October 1, 2020. 1.3. In terms thereof, Appellants I & II and Appellant III purchases vehicles from MSIL and RIPL respectively for making onward sale to the customers. MSIL / RIPL supplies vehicles on ex-works factory basis. MSIL / RIPL periodically declares Maximum Selling Price ('MSP') below which Appellants are free to price the vehicles. 1.4. MSIL / RIPL also provides incentives and offers discounts to its dealers including appellants subject to the fulfillment of pre-notified conditions. These are passed on by way of credit entrie....
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....ut in the incentive schemes. It can merely refuse to extend the incentives to Appellant but cannot sue for non-performance or for any other damages. 2.2 He also further submits that extended period is not invokable and penalties are not imposable. Extended period has been incorrectly invoked in the present case as necessary ingredients are not satisfied. Further, the issue in hand involves interpretation of the scope and ambit of the term 'service' and declared service.Penalties are not imposable since, there is no fraud, suppression and malafide intention on part of Appellants to evade payment of tax. 2.3 On the issue regarding booking cancellation charges are not exigible to service tax, he submits that Cancellation of booking charges are in the nature of compensation and not consideration. Hence, there is no provision of service made towards such cancellation. In the case of Divine Autotech Private Limited v. CCT, 2024-VIL-745-CESTAT-DEL-ST, it was held that booking cancellation charges for motor vehicles received by Appellant is in the nature of compensation and not consideration for service. Further the CESTAT placed reliance on Circular No. 178/10/2022-GST dated August ....
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....enault India Private Limited 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 Private Limited/ M/s Renault India Private Limited on the basis of yearly performance of sale grants the discount to the dealer, this discount is nothing but a discount in the sale value of the vehicle sold throughout the year therefore, these sales discount in the course of transaction of sale and purchase of the vehicles, hence, the same cannot be considered as service for levy of service tax. This issue is no longer res-integra as the same has been decided in the various judgments cited by the appellant. Learned counsel has also relied upon the judgment by this Tribunal vide Final Order No.A/11748/2022 dated 28.11.2022, in the case of B M Autolink (supra) which is reproduced below:- "04. 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. Th....
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....with MUL, the appellant has received various incentives/discounts/bonus etc. from MUL from time to time. The income received under these heads was accounted by the appellant in their books of account as "miscellaneous income". During the course of audit of the books of account of the appellant, the Department noticed such Misc. income and took the view that such amounts received by the appellant from MUL are consideration towards promotion and marketing of the vehicles manufactured by MUL and such consideration is liable for payment of Service Tax under the category of Business Auxiliary Service. By taking the above view, show cause notice dated 17-10-2011 was issued covering the period 1.4.2006 to 31.3.2011. Further, show cause notice dated 9- 10-2012 was issued covering the period 1-4-2007 to 31-3-2012. The proceedings initiated under the above show cause notices resulted in the issue of two impugned orders, which are under challenge in the present appeals. Since the issue involved is common, these appeals are disposing of with this common order. The demands have been raised by Revenue through the two impugned orders covering overlapping periods. Demand has been made under the ca....
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.... in the case of South Eastern Coal Fields Ltd. (supra), in the absence of consignment notes, the activity of the appellant cannot be classified under GTA service. Consequently, we set aside the demand under GTA service." 10. The same view was taken by the Tribunal in CST v. Sai Service Station Ltd. - 2013 (10) TMI 1155-CESTAT Mumbai = 2014 (35) S.T.R. 625 (Tribunal). 11. In regard to the period post July, 2012, reliance has been placed by the Learned Counsel for the appellant on an order dated March 23, 2017 passed by the Joint Commissioner, Central Excise in the matter of M/s. Rohan Motors Ltd. (own matter). The period involved was from October, 2013 to March, 2014 and 2014-15. The Joint Commissioner, after placing reliance upon the decision of the Tribunal in Sai Service Station Ltd. (supra), observed as follows: "I also find that the ratio of the aforesaid case of CCE, Mumbai-I v. Sai Service Station is squarely applicable to the facts of the present case and hold that no service tax can be demanded on the „incentive‟ which was in form of trade discounts, extended to the party in terms of a declared policy for achieving sales target. Accord....
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.... by them only constitutes transfer of title in goods by virtue of sale of vehicles which falls within the negative list and as per Section 66D(e) of the Finance Act, 1994, 'trading of goods' is excluded from levy of service tax. They have also raised the issue of limitation as the Show Cause Notice was issued on 12.4.2019 covering the period from April 2013 to June 2017 and hence the same is barred by time. 7. The authorised representative for the revenue has supported the findings of the authorities below. 8. The issue which arises for our consideration is whether service tax is leviable on incentives / discount reimbursement extended by MSIL to the appellant. 9. The issue is no longer res integra and as referred to by the Learned Counsel for the appellant the same has been considered and decided in favour of the assessee in the following cases: (i) Rohan Motors Limited vs. Commissioner of Central Excise (2021 (45) GSTL 315 (Tri-Del.) (ii) TV Sundram Iyengar & Sons Pvt Ltd. vs. Commissioner of CGST & C.EX. Madurai (2021 (55) GSTL 144 (Mad.))-2021-VIL-391-MAD-ST (iii) B M Autolink vs. Commissioner of Central Excise,2022-....
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....ion of the business of the Airlines. On the issue, whether 'incentive' paid for achieving target are taxable, the Tribunal analysed the scope of the term 'incentives' that they are generally given to encourage performance of the party. It is relevant to appreciate the observations made in the said judgment : "77. Consideration, which is taxable under section 67 of the Finance Act, should be transaction specific. Incentives, on the other hand, are based on general performance of the service provider and are not to be related to any particular transaction of service. It needs to be noted that commission, on the other hand, is dependent on each booking and not on the target. If the air travel agent does not achieve the predetermined target, incentives will not be paid to the travel agents. 78. In this connection it will be appropriate to take note of the decision of the Federal Court of Australia AP Group. The Federal Court of Australia held that in order to levy tax, the payment must be attributable to a particular supply and not to supplies in general and so the target incentives paid by a motor vehicle manufacturer to a dealer would not qualify as ....
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....ant and we find that MSIL is engaged in manufacturing, marketing and selling of motor vehicles and the appellant purchases the vehicles from the manufacturer as their authorised dealer on principal to principal basis. The relevant clause is quoted herein below: " C. MSIL having considered the representations made and the application submitted by the Dealer agrees to appoint the Dealer as the Authorised Dealer. It is made ST/50826/2021 clear that MSIL would sell the products and parts to the dealer on principle to principal basis. The dealer would sell the products and parts and would provide service to the customers (which would include, but not be limited to, the service in terms of the warranty as per the owner's manual provided by MSIL from time to time) which promotes and maintains customer confidence and customer satisfaction on the terms and conditions mutually agreed to between the parties and contained in this agreement." 13. We also find that the activity undertaken by the appellant is for the sale and purchase of the vehicle and the incentives are in the nature of trade discounts. The incentives, therefore form part of the sale price of the vehicles ....