TaxTMI 
TaxTMI 
2025 (7) TMI 215
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....Repair, Reconditioning, Restoration, or Decoration or any other similar service, of any motor vehicle, under Business Auxiliary Service and Business Support Service. 1.2 Based on intelligence regarding non-payment of Service Tax by authorized dealers of MSIL in relation to certain payments received as incentives / discounts reimbursements, opining them to be in nature of consideration for Service, an investigation was initiated. Vide letters dated 27.08.2018 and 06.09.2018 month wise details of the amounts of incentives / reimbursements /discounts received by appellants from MSIL during April, 2013 to June, 2017 were called for from the appellants.In response thereto, appellant submitted copies of following: (i) Cash Back Scheme & RIPS Scheme for FY 2013-14; (ii) RIPS Others scheme, RIPS Support Scheme & Exchange Offer Scheme for FY 2014-15; (iii) RIPS scheme, Exchange Bonus Offer Scheme, RIPS Support Scheme for FY 2015-16; (iv) Consolidated Offer Scheme & Exchange Offer FY 2016-17; and (v) Consolidated Consumer Offer Scheme for FY 2017-18 (upto June, 2017). 1.3 From perusal of these documents and from the statement of Shri Suresh ....
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....e incentives received by the M/s VMPL did not relate to provision of any services because the M/s VMPL and MSIL are acting on Principal to Principal basis. Otherwise also these incentives are received by the M/s. VMPL as an award for meeting up the business targets set by MSIL. Thus, they are in the nature of target incentives/discount and are not connected to any type of provision of service to MSIL. Further, in the absence of element of "Service", the charging section 66B doesn't apply and therefore such incentives are not chargeable to service tax. 4. Ld. Counsel further submitted that the issue stands already decided by CESTAT, Allahabad in the case of M/s. Vipul Motors Pvt. Ltd. vs. Commissioner of Customs, Central Excise and Service Tax Noida, Final Order No. ST/A/72161/2008- CU(DB) dated 04.09.2018 wherein it was held that incentives received from MSIL for achieving sale target are not the part of the value of services. It also relied on the Landmark decision of T.M. Motors Pvt. Vs CGST & CE, Alwar reported as (2018 (7) TMI 1384, CESTAT New Delhi). It is also submitted that once there was no service tax liability, question does not arises for demanding interest nor for im....
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....a 2016 (41) S.T.R. 311 (Tri. - Mumbai) it was held that incentives received by the car dealers on principal to principal basis are not chargeable to service tax. Relevant para of the said decision are as under: "6.5. On the appeal by Revenue on the issue of incentives received by the appellant from the car dealer, we observe 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 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 manufactures 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/incentives to the dealers. The issue is settled in the case of Sai Service Station (Supra). Therefore, we reject the appeal of the department." 7.3 In yet another decision titles as My Car Pvt. Ltd. V. CCE, Kanpur rep....
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....formance based trade discounts on achieving certain performance targets or is an activity which is mutually beneficial to both the appellant and MUL. It is not the case of the Revenue that MUL continues to remain the owner of the goods dealt by the appellant. All the vehicles/spares are purchased by the appellant and then sold. The incentives given by MUL has to be considered performance based trade discounts and will not be in the nature of BAS commissions. On perusal of the case records and the factual matrix we agree with the arguments of the appellant that payments received on these accounts cannot be held to be classifiable as provision of taxable services of BAS under Section 65 (19) of the Finance Act, 1994." 7.4 Also in the case of CCE, Kanpur v. M/s Cross Road Auto Pvt. Ltd. 2015 (8) TMI 1247 - CESTAT Allahabad wherein it was observed that: "Heard both sides and perused the case records. The issue involved in the present proceedings is whether respondent is liable to pay service tax on free own services provided by the dealers. First Appellate Authority has relied upon the case law of ASL Motors Pvt. Ltd. cs CCE & ST, Patna reported in 2008 (9) S.T.R. 356 (Tri.....
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.... of incentives / discounts received by the appellants during the period of dispute have wrongly been held as consideration for rendering a service called BAS. Service tax demand is therefore held to have been wrongly confirmed by the Adjudicating Authority below. The adjudicating authority has rather failed to observe the judicial protocol. 7.6 In the light of the entire above discussion, the charging of interest under section 75 of the Finance Act 1994 is also not sustainable when service tax itself is not payable. In such circumstances neither there is non-payment / short payment of service tax nor there is contravention of any provision of service tax act by the appellant. Hence penalty also cannot be imposed upon the appellant firm nor on its proprietor. We draw our support from the decision of Hon'ble supreme Court in the case of Pratibha Processors versus Union of India (1996) (SC), the relevant extract of judgement in above said case has been reproduced as under: "In fiscal Statutes, the import of the words - "tax", "interest", "penalty", etc are well known. They are different concepts. Tax is the amount payable as a result of the charging provision. It is a comp....