TaxTMI 
TaxTMI 
2026 (9) TMI 1122
X X X X Extracts X X X X
X X X X Extracts X X X X
....imbursement that the investigation got initiated to ascertain the nature of the payments received by the said respondent from Hyundai Motors Ltd. Statement of the representative of the respondent was recorded. Certain documents were also provided by the respondent including the Dealership Agreement. From the perusal thereof, the department formed the opinion that the arrangement of the respondent with Hyundai Motors was of two types: target based schemes and non-target based schemes. 2.1 Department alleged that the incentives on different levels of achievement of order/retail targets like early bird, month end/higher slab, quarterly or half yearly bonus under the aforesaid two schemes are in the nature of consideration paid to the respondent for activities performed/rendered by the dealer/respondent to Hyundai Motors explicitly on the understanding that the dealer will receive amounts calculated based on his efforts leading to performance as defined in the agreements. Alleging the same to be the consideration for providing the taxable service received during the period from 01.02.2015 to 30.06.2017, that the service tax amounting to Rs. 1,29,18,163/- alongwith the interest at th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ledge about the tax liability of the Company but no efforts were taken to get the said liability discharged. Penalty upon the said co-respondent has wrongly been set aside in the impugned order. The order as under challenge, accordingly, prayed to be set aside and both the appeals are prayed to be allowed. 5. Ld. Counsel for the respondent shows that the respondent buys goods and sells them on its own account. It carries on no activity "for another" since the goods are of their own and the profit on resale is also of their own. The activity is not a service rendered to HMI. Any benefit to HMI is incidental to the trade. The receipts are a discount, i.e. a reduction in the price of goods, it is immaterial that the discount is allowed after the sale on fulfillment of conditions. A price adjustment on goods cannot be the consideration for a service. Ld. Counsel further submitted that Section 66E(e) is not attracted. Mere compliance with contractual obligations in the ordinary course of business is not 'service'; the scheme of discounts is a normal market practice uniform across all dealerships. Also no amount was charged by the Respondent to HMI for any service. The element....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of amount received by the respondents from M/s HMI have not properly dealt with by Commissioner (Appeals). 8. We observe that the amounts received by the respondents are as follows: (i) Demo Discount/Support relating to purchase and maintenance of demonstration vehicles: (ii) Sales promotion incentive for pushing sales of older stock and/or achieving year-end sales objectives; (iii) Zonal Manager Budget Incentive; (iv) Sales Manager/General Manager Incentive; (v) CNG Support in relation to sale of CNG-fitted vehicles; (vi) Courtesy Car Financial Support for making a vehicle available to customers while their vehicle remained under repair; (vii) Damaged Car Compensation/Support in relation to sale/disposal of damaged vehicles; (viii) Other incentive/discount/reimbursement amounts linked with prescribed quantitative and qualitative targets and compliance with specified conditions. 9. The demand on all these amounts were confirmed by the original adjudicating authority with the sole understanding that all of these amounts have been received by the respondent in reciprocity of rendering an activity and thus ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onsidered as service, the relationship otherwise was admittedly on principle to principle basis, hence the incentive received by the appellant was nothing but a trade discount/reduction in price of goods. A discount does not seize to be a discount primarily because it is quantified or paid after the sale so long as it was known to the buyer at or before the sale, we draw our support from the decision of Hon'ble Supreme Court in the case of Moped India Ltd vs. Assistant Collector of Central Excise Nellore reported as 1986 (23) ELT 8 S.C. in fact department's own notice categorises the amount as discount and reimbursement when the details with respect to the said amount were called from the respondents. 13. The Commissioner (Appeals) has also dropped the demand under Section 66E(e) of the Act. We observe that Section 66E(e) is attracted only where the agreement itself specifies (i) the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act, and (ii) the consideration flowing specifically for agreeing to that obligation; and the agreement must be read as a whole to gather the intention of the parties South Eastern Coalfields Ltd. v. CCE & S....