TaxTMI 
TaxTMI 
2024 (11) TMI 993
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....he goods will not attract any service tax. He submits that at the time of raising the invoice, the appellant though shown the handling charges in the sale invoice but the VAT was not paid on the handling charges, subsequently the VAT department has made out a case according to which it was held that the handling charges being a part of the sale price the same shall attract the VAT. Accordingly, the appellant have discharged the VAT on such handling charges. Therefore, handling charges became a part of the sale of the goods as held by the department. Therefore, in this consequences, the handling charges being a part of sale price will not attract the service tax. In this regard, he referred to sales invoice as well as the proceedings of the commercial tax department of the State Government. He submits that this issue is no longer res-integra in the light of the various judgments, he placed reliance on the following judgments : - * Bharat Sanchar Nigam Ltd. v UOI 2006 (2) STR 161 (S.C) * GMK Concrete Mixing Pvt. Ltd. v GST, Delhi 2012 (25) STR 357 (Tri.-Del) * Automotive Manufacturers P. Ltd. V/s. CCE & C, Nagpur 2015 (38) S.T.R. 1191 (Tri. - Mumbai) * Indian Oil Corporation ....
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....ra in as much as in various judgments, it was held that if the handling charges is included in the sale value of the car and VAT was paid then such handling charges being a part and parcel of the sale value will not be exigible to service tax. In this regard, we take support of the following judgment:- * In the case of C.C.E. & S.T.-Surat-I vs. Ganga Automobiles vide Final Order No. 12206/2023 dated 05.10.2023, this Tribunal has passed the following judgment:- "4. We have carefully considered the submission made by both the sides and perused the record. We find that since the entire ground of the revenue is based on the clarification in a Board Circular No.96/7/2007-ST dated 23.08.2007. It is necessary to carefully understand the clarification given by the board. Therefore, the clarifications under the relevant reference code 036.03/ 23-08-2007 of the circular No. 96/07/2007-ST dated 23.08.2007 is reproduced below : 036.03/ 23-8-07 Whether spare parts sold by a service station during the servicing of vehicles is liable to payment of service tax? Whether exemption can be claimed on the cost of consumables that get consumed during the course of providing serv....
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.... though the consolidated bill was raised but they have shown separate portion of service and spare parts and in the portion of spare parts, it is clearly shown as a sale of goods and VAT was paid. Therefore, even by considering the above board circular according to Para1 of the clarification, It is clear that when the spare parts was sold and VAT was paid no service tax can be charged thereon. Similarly, in the case of handling charges the same is included in the sale value of the sale of the vehicle and on total value the VAT was paid. Therefore, the handling charges are nothing but incidental to the sale of the goods and the same is part and partial of sale value of the vehicle on which VAT was paid. Therefore, no service tax can be charged on handling charges. The issue related to the spare parts as well as the handling charges have been considered in the following Judgments: a) Infinium Motors Guj. Pvt. Ltd. (supra),in this case this Tribunal after considering various judgments given the following concluding findings: "From the above judgments it is seen that various Benches of this Tribunal have taken a consistent view in the identical facts of the present case that where ....
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....he sale of goods, the question to claim service tax thereon does not arise. 7. We further find that even in the worse situation in various cases where the parts and components were used in repair and maintenance of motor vehicle even then merely because the part so used in repairs and maintenance were separately billed and VAT was paid thereon, the Tribunal held that on value of such parts, though used for repair and maintenance service of the vehicle will not be liable to service tax as the same was suffered VAT. In this regard the following judgments are reproduced:- (a) In Ketan Motors Limited the Tribunal held as under "5. We have carefully considered the rival submissions. As the issue lies in a narrow compass, after dispensing with the requirement of pre-deposit, we take up the appeal itself for consideration. 5.1 In para 3.2 of the impugned order it is stated that the appellant had furnished the following information and documents vide letter dated 21-9-2011 : (i) Year wise details of value of spare parts used during the course of servicing of motor vehicles for the period 2006-07 to 2010-11; (ii) Copy of Balance Sheet, Profit & Loss Account for the year 2006-07 ....
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....des. We notice that the appellant are charging handling charges whenever automobile parts are sold either independently or part of the service and repair of automobiles. In both the situations, invoice are issued for the sale of the goods as well as for collection of service charges for the services rendered. Handling charges were incurred in connection with the procurement of the goods and are included in the value of the goods sold and sales tax/VAT liability is discharged on the value inclusive of the handling charges. Therefore, we do not understand how service tax levy would apply especially when the goods are subject to sales tax/VAT on a value inclusive of handling charges. It is not in dispute that the handling charges are incurred in connection with the procurement of the parts. If that be so, they will obviously form part of the value of the goods when they are subsequently sold. 5.1 Section 67 of the Finance Act, 1994 mandate levy of service tax on a value or consideration received for rendering the services. Therefore, any consideration received for supply of goods is not covered within the scope of Section 67. The decisions of the Tribunal in the case of Ketan Motors....
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....d. Therefore, we do not find any infirmity in the reasoning adopted by the lower appellate authority. Accordingly, we dismiss the appeal filed by the Revenue as devoid of merits." 8. From the above decision, the conclusion drawn is that when there is sale of goods and VAT is paid no service tax can be demanded. In the present case, it is undisputed that the element i.e. amount towards Handling and Forwarding charges, the appellant have shown as part of the sale value of the goods and VAT was paid. Therefore, following the above principle of law laid-down by Hon'ble Supreme Court and by Tribunals, in the present case the demand is not sustainable. Hence the impugned order is set-aside and the appeal is allowed". 4.2 In view of the above judgments on both the issues i.e. use of spare parts during service under authorised service stations and sale thereof on payment of VAT and handling charges recovered from the customers in the invoices of vehicle sale, it is held that no Service Tax can be charged on that amount. Therefore, the issue is no longer res-integra. Accordingly, considering the above discussion and finding coupled with the judgments cited above the impugned order is cl....