TaxTMI 
TaxTMI 
2026 (3) TMI 651
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....s & Service Tax (Appeals), Cochin. 2. Briefly stated the facts of the case are that during the course of verification of the records of the appellant, it was noticed that the appellant was providing free service of the Maruti vehicles as per the Dealership Agreement between the appellant and M/s. Maruti Udyog Ltd. (MUL, for short). Alleging that they have not discharged the service tax of the services rendered during warranty period of the Maruti make vehicles sold through their own showroom and also they have not paid service tax on the cost of spares, accessories replaced during the warranty period and extended warranty scheme, show-cause notice was issued to them for recovery of service tax for the period from April 2006 to March 2009....
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....s received by the appellant from MUL as it was only a sort of reimbursement of cost incurred by the appellant while servicing the vehicles during the warranty period. Referring to the judgment of Hon'ble Supreme Court in the case of CCE Vs. Tata Motors Ltd. [2019-TIOL-418-SC], he has submitted that warranty income is not taxable when no additional consideration is received but the value of such services is already embedded in the sale price of the goods. In support, he has referred to the following judgments: i. TAFE Access Ltd., Coimbatore Vs. CGST &CE, Coimbatore [2023 (5) TMI 1154-CESTAT - Chennai] ii. CCE, Mumbai Vs. Sai Service Station Ltd. [2013(30) STR 586 (Tri. Mum.)] iii. Hero Honda Motors Ltd. Vs. CST, D....
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....less, similar view in relation to leviability of service tax on the amount paid by the manufacturer to the dealers for providing free services to the customers of the product during the warranty period also is taken by this Tribunal in the case of Hewlett Packard India Sales Pvt. Ltd. Vs. CCE&ST(LTU), Bangalore [2024(388) ELT 374 (Tri. Bang.)]. 8. On the issue of leviability of service tax on reimbursement of cost of spare parts used in providing free services by the dealers to customers during the warranty period is also no more res integra and is covered by the judgment of Chennai Bench of this Tribunal in the case of TAFE Access Ltd. (supra). The Tribunal referring to its earlier judgment in the case of ABT Ltd. (supra) and others, wh....
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....n on behalf of the manufacturers during the warranty period. In those cases, where the buyers of the vehicles have opted for extended warranty, such services are also rendered by these dealers. In respect of services rendered during warranty period, the cost and spares used in replacement during such services are reimbursed by the manufacturers of the motor vehicles. In respect of the extended warranty service also the cost of such spares as well as labour is reimbursed to the dealers by the manufacturers of motor vehicles. The extended warranty premium is collected from those buyers of vehicles who opt for by these dealers and they are remitted to the respective manufacturers. In the above factual scenario, the department issued show cause....
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....n which service tax is liable to be paid by the authorized dealers. 5. After considering the submissions made by both sides as well as perusal of records, we find that the service tax demand has been raised by Revenue on the cost of spare parts used while rendering the warranty as well as extended warranty service. After a perusal of some of the sample invoices raised for such work, we note that the spare parts have in fact been sold on payment of VAT. Consequently, we are of the view that the cost of spare parts cannot be included for purposes of levy of service tax. Such demand of service tax is not justified and hence are set aside." 10. In the appellant's own case the very same issue was decided for the subsequent peri....