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2025 (3) TMI 1603
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....2017. (ii) I confirm the demand of interest at the appropriate rate on the service tax amount confirmed in point (i) above against the Noticee under Section 75 of the Act, read with Section 174 of the CGST Act, 2017 (iii) I impose penalty of Rs. 2,20,83,294/- (Rs. Two Crores Twenty Lakhs Eighty Three Thousands Two Hundred Ninety Four only) upon Noticee under Section 78 of the Act, read with Section 174 of the CGST Act, 2017. The Noticee has an option to pay penalty @ 25% of the amount of service tax as determined above, if the confirmed service tax alongwith interest and reduced penalty is paid within a period of 30 days of the date of receipt of order. (iv) I drop the imposition of penalty under section 77 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017 upon the Noticee 2.1 Appellant is registered with the Department for providing Manpower recruitment/ supply agency service, Repair, reconditioning, restoration, or decoration or any other similar services, of any motor vehicle, Business auxiliary service. Transport of goods by road/goods transport agency service, Legal consultancy service. 2.2 On the basis of the intelligence th....
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....s clear on one part that since these kinds of discounts are not linked with the invoices, incentives received under any contractual obligation to render any service be levied to service tax under the category of Business Auxiliary Services. The nature of the discount should be known at the time of or prior to the removal of the goods. In this case it is not possible to determine the quantum of discount because it is based on a target figure 2.6. The services provided do not fall in the ambit of Negative List of Services as given in Section 66D of the Act and also not exempted under Mega Exemption Notification 25/2012 S.T. dated 20.06.2012 Every activity for a consideration by any person for another shall be liable to service tax unless excluded under the negative list or is specifically exempted. The incentive is paid by the company to retailers for achieving specified targets. The act of the Appellant performing a specific activity for which the company gives an incentive may qualify within the definition of service. Hence, the service provided by the Noticee is/are taxable service(s) as per the provisions of Section 66B of the Act 2.7. Appellant had suppressed material fact....
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....ed as per the impugned order referred in para 1 above. 2.11 Aggrieved Appellant has filed this appeal. 3.1 We have heard Shri Dharmendra Kumar, Chartered Accountant for the Appellant and Shri Manish Raj Authorized Representative for the Revenue. 3.2 Arguing for the Appellant learned Chartered Accountant submits on the merits of the demand made by levying the service tax on the activities undertaken by the Appellant and in dispute in the present proceedings the issue is no longer res-integra and has been decided in the favour of Appellant by the following decisions: ⮚ Reliable Automotive Pvt. Ltd. [2024-TIOL-450-CESTAT-MUM] ⮚ Veer Prabhu marketing Ltd. [Final Order No 50105/2023 dated 06.02.2023 of Delhi Bench] ⮚ Comet Car Sales And Services Pvt. Ltd. [Final Order No 12675-12679/2024 dated 12.11.2024 of Ahmedabad Bench] ⮚ My Car (Pune) Pvt. Ltd. [Final Order No A/85973/2023 dated 19.06.2023 of Mumbai Bench] 3.3 Authorized Representative appearing on behalf of the Revenue reiterates the findings recorded in the impugned order. 4.1 We have considered the impugned order along with the submissions made in app....
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....tors, Dealer's Handling Charge, Discount & Rebate, Registration Income, Teflon Income, Tata Motors Ltd - Business Support and Others. Now, I take up the issue of service tax leviability on each subheading one by one. (i) Receipt under subheading Bonus /Trade Incentive from Tata Motors: The department has alleged that the Noticee is receiving this incentive for achieving the turnover target. These incentives are not linked with the invoices at time of sale but after achieving the turnover/sale achieved by the Noticee. Therefore these incentives is being received for completing the contractual obligation of achieving sale/turnover target which is liable for levy of service tax under the category of Business Auxiliary Services. On the other hand, the Noticee has averred that these discounts/incentives are received from supplier in respect of purchase of large volume of stock which is actually reduction in purchase cost of material. It means, it is a trading discount granted by supplier from making large purchases. This discount or incentive actually reduces purchase cost of assessee. Discount/incentive aroused only when assessee making large purchases. T....
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.... at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market; (iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use; (v) loading, unloading, packing, storage or warehousing of agricultural produce; (vi) agricultural extension services; (vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce; (e) trading of goods; (f) ***).; (g) selling of space for advertisements in print media; (h) service by way of access to a road or a bridge on payment of toll charges; (i) betting, gambling or lottery; Explanation.- For the purposes of this clause, the expression "betting, gambling or lottery" shall not include the activity specified in Explanation2 clause (44) of section 65B; (j) *....
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.... the respective local body of the city or town or village or development or planning authority; (II) the expression "construction includes additions, alterations, replacements or remodelling of any existing civil structure; (c) temporary transfer or permitting the use or enjoyment of any intellectual property right; (d) development, design, programming, customization, adaptation, upgradation, enhancement, implementation of information technology software; (e) agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act; (f) transfer of goods by way of hiring, leasing, licensing or in any such manner without transfer of right to use such goods; (g) activities in relation to delivery of goods on hire purchase or any system of payment by instalments. (h) service portion in the execution of a works contract; (i) service portion in an activity wherein goods, being food or any other article of human consumption or any drink (whether or not intoxicating) is supplied in any manner as a part of t the activity. (j) assignment by the Government of the right to use the r....
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...... In light of the above provision, I find that the amount received as 'Others' 'Discount and Rebates', should be integral part of valuation for determination of service tax liability. Therefore, I hold that the Noticee is liable for payment of service tax on amount received under subheading 'Others', 'Rebates' and 'Discount' of the profit & loss account (iii) Receipt under subheading 'Registration Income' and 'Teflon Income': Regarding the service tax liability on 'Registration Income' and Teflon Income' the Noticee has averred that these amounts are covered under services provided by them and accordingly paid the service tax on amount shown under subheading Registration Income' and Teflon Income' of 'other operating revenue. From the perusal of the ST-3 returns filed by the Noticee, I find that the taxable value shown in ST-3 is less than the service income shown in their profit & loss account for the respective financial year. Therefore, I find that the averment by the Noticee is not tenable. Therefore, I hold that the Noticee is liable for payment of service tax." 4.3 We find that the issue involved in the present cas....
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....tegra 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. The transaction between M/s. Maruti Suzuki India Ltd. and the dealer and subsequently sale transaction between the dealer and the customs are purely on principal to principal basis. The vehicle manufacturer M/s. Maruti Suzuki India Ltd. 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....
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....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 category of Business Auxiliary Service for the amounts received by the Appellant from M/s. MUL. Such amounts have been received towards incentives/discounts in connection with the sale of the vehicles manufactured by MUL. In addition, certain amounts have also been received by the Appellant towards Registration/Number Plate etc. to facilitate the buyers of vehicles. All the above amounts have been charged under BAS. Certain amount of Service Tax has also been demanded under the category of GTA in respect of freight paid by the Appellant towards transport of vehicles from their dealership to the customers‟ premises." 9. T....
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....). 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. Accordingly, I find that the demand of service tax raised on this count is unsustainable. Thus demand of interest under section 75 of the Act is also no sustainable." 12. The Department, in the present case have erred in taking a different view. The service tax on the amount received as incentives could not, therefore, have been levied to service tax. 13. Thus, in view of our findings, it is not possible to sustain the impugned order dated 28.02.2019 passed by the Commissioner. It is, accordingly, set aside and the appeal is allowed. From the above judgment, which has considered other decisions also, it ....
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.... 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-VIL-900CESTATAHM-ST (iv) Roshan Motors Pvt Ltd. vs. Commissioner of Central Excise2022-VIL654-CESTATDEL-ST (v) Anand Motor Agencies Limited vs. Commissioner of Customs-2022-VIL116-CESTAT-ALHST (vi) Kafila Hospitality and Travels Pvt Ltd. vs. Commissioner of Service Tax (2021(47)GSTL 140(Tri-LB)-2021-VIL-101-CESTAT-DEL-ST 10. That all the above cases relates to dealership agreement between the manufacturer of motor vehicles (MUL, MSIL,TML) with their dealers for sale purchase of vehicles. In terms of the agreement it has been noticed that the dealer works on principle to principle ba....
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.... 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 consideration as the incentives would be in relation to all supplies and not in relation to a particular supply. The relevant portion of the decision of the Federal Court is reproduced below:- "53. On analysis, the so-called supplies for consideration identified by the Commissioner are nothing more than the encouragement of an overall business relationship between the manufacture and the dealer to the mutual benefit of both. The relationship involves a whole raft of obligation from one to the other all, presumably, with the ultimate objective of maximizing their respective commercial positions. As the AP Group put it, the overall....
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....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 and have no correlation with the services to be rendered by the Appellant. That in terms of the dealership agreement, the Appellant purchases the vehicles from MSIL and sells the same to its end customers. The activity of promoting the sale is with respect to the vehicles owned by the Appellant which incidentally is in interest of both the parties. Reliance is placed on the observations referred above in the case of Kafila Hospitality and Travels Pvt Ltd. (supra). 14. We also find that the Appellant is engaged in the onward sale of vehicles which involves merely transfer of property in goods which is excluded from the definition of 'service&#....