TaxTMI 
TaxTMI 
2026 (2) TMI 1275
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..... 2. These two appeals are filed against respective Orders-in-Original passed by the Commissioner of Central Excise and Customs, Cochin. 3. Briefly stated the facts of the case are that the appellants are authorised dealers for M/s. Maruti Suzuki India Ltd. (MSIL, for short) for sale of 4 wheelers. Investigation was initiated against the appellant on the basis of intelligence that they were receiving various incentives from MSIL for sale of cars / spares etc. but failed to discharge service tax for the services rendered, which fall under the scope of Business Auxiliary Service (BAS) during the period from 2005-10 to 2009-10 (appeal No. ST/1137/2012) amounting to Rs.85,85,762/- and for the period from 2011-12 & 2012-13 amounting to Rs.79,33,675/-. Show-cause notices were issued on 12.01.2011 and 21.05.2014 invoking extended period of limitation for recovery of the said amounts with interest and proposed for penalty. On adjudication, the demands were confirmed with interest and penalty. Hence, the present appeals. 4. At the outset, the learned advocate for the appellant referring to the Dealers Agreement entered with MSIL has submitted that the relationship between the appel....
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....case of Bangalore Motors Pvt. Ltd. (supra). Following the principle of law laid down in the case of Prem Motors Pvt. Ltd. [2023(73) GSTL 97 (Tri. Del.)], this Tribunal held as follows:- 7. The facts not in dispute are that the appellant are authorized dealers of Volkswagen brand cars and also providing services of cars of the said brand. On purchase of the cars from the manufacturer Volkswagen Limited, they received various discounts / incentives on achieving the sales target during the relevant period. Applicability of service tax on trade discount / incentives received by an authorized automobile dealer from the manufacturer, is no more res integra and covered by a recent judgment of this Tribunal in the case of Prem Motors Pvt. Ltd. Vs. CCE&CGST, Jaipur (supra) wherein the Tribunal scrutinizing the case laws on the subject observed as follows: 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 as....
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.... 'Business Auxiliary Service' on target based incentives paid to the travel agents by the Airlines as they were promoting and marketing the business of the Airlines. The Tribunal took the view that it is not a case where the air travel agent is promoting the service of the Airlines rather by sale of airlines ticket he was ensuring the promotion of its own business even though this may lead to incidental promotion 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....
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....hese reasons there cannot be said to be any supply for consideration in these arrangements. (Emphasis supplied) 12. As a matter of judicial discipline the aforesaid decisions are binding on us and in light thereof we find that the present case is squarely covered by the law laid down in those judgments. We have examined the dealership agreement entered between MSIL and the appellant 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 clear that MSIL would sell the products and parts to the dealer on principal 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....