TaxTMI 
TaxTMI 
2026 (9) TMI 1599
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....les from those manufacturers and sell the same to their retail customers. In such activity of sale of vehicles, the appellant acts as trader of Maruti, BMW, JLD brand of vehicles, inn which the dealership agreement between the appellant and the vehicle manufacturers is on principal-to-principal basis. Being a reputed and well established, experienced authorised dealer, the appellant is also providing authorised service center facility for MSIL, BMW and JLR vehicles. For the purpose of payment of service tax on taxable services such as Maintenance and repair services (authorised service station), Business Auxiliary Services (BAS) and Business Support Services (BSS), etc., they are registered with the jurisdictional Service Tax authorities by holding Centralized Registration No. AAACN1252A5T008. With the introduction of GST regime, the appellant has also taken GSTN number duly registering with the State of Maharashtra vide GSTN 27AAACN1252A1Z5. 2.3 On the basis of intelligence developed by the Directorate General of Central Excise Intelligence (DGCEI) that the appellant was receiving incentives and additional discounts from various car manufacturers for providing certain services,....
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....umber of cases and the issue has been decided in their favour in the following cases: (i) Sai Service Station Ltd. Vs. Commissioner of Service Tax, Mumbai-I - 2013-TIOL-1436-CESTAT-MUM (ii) Sai Service Private Ltd. Vs. Commissioner of Central Excise & GST, Pune-I - Final Order No.A/86995-86997/2023 dated 09.10.2023 (iii) Autobahn Enterprises Private Ltd. Vs. Commissioner of Service Tax, Mumbai-I - 2022 (56) G.S.T.L. 312 (Tri. - Bom.) (iv) My Car Private Limited v. Commissioner of Central Excise, Kanpur - 2015 (40) S.T.R. 1018 (Tri. - Del.) (v) Commissioner of Service Tax, Mumbai Vs. Jaybharat Automobiles Limited - 2016 (41) S.T.R. 311 (Tri. - Mumbai) (vi) Rajasthan Rajya Vidhyut Prasaran Nigam Ltd. Vs. Commissioner of Central Goods & Services Tax and Central Excise, Jodhpur-I - 2022 - TIOL-134-CESTAT-DEL Hence, learned Counsel pleaded that the impugned order is not legally sustainable and consequently no penalty is imposable on the appellants. 4. Learned Authorised Representative (AR) for Revenue reiterated the findings in the impugned order. 5. Heard both sides and perused the records of the case. We have also examined....
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.... tax on liquidated damages arising out of breach of contract, forfeiture of salary or payment of bond amount in the event of the employee leaving the employment before the minimum agreed period and similar other issues arising out of clause (e) of section 66E of the Finance Act, 1994. Reference has also been invited to Circular No. 178/10/2022-GST, dated 3rd August, 2022 regarding applicability of GST on liquidated damages, compensation and penalty arising out of breach of contract or other provisions of law, and its applicability to service tax related issues. 2. It may be seen that "Agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" is a Declared Service as per clause (e) of section 66E of the Finance Act, 1994. A service conceived in an agreement where one person agrees to an obligation to refrain from an act or to tolerate an act or to do an act, would be a 'declared service' under section 66E, read with section 65B(44) and would be leviable to service tax. 3. The description of the declared service in question, namely, agreeing to the obligation to refrain from an act or to tolerate an act or a si....
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....vised that while taxability in each case shall depend on facts of the case, the guidelines discussed above and jurisprudence that has evolved over time, may be followed in determining whether service tax on an activity or transaction needs to be levied treating it as service by way of agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act. Contents of Circular No. 178/10/2022-GST, dated 3rd August, 2022, may also be referred to in this regard." 7.3 From the above instructions of CBIC, it clearly transpires that in the absence of any contractual obligation or flow of consideration for the specific act of doing an act or tolerating an act etc., it cannot be said that such receipt of discounts, incentives etc. could be said to be a service under the category of declared service for the purpose of levy of service tax. This is for the reason, that such receipts are related to sale of cars or service of cars, to which the appellant is working as authorized dealer for sale or authorized service centre for providing maintenance or repair service. Therefore, such activities cannot be treated as 'agreeing to the obligation to do an act' fo....
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....e Tribunal has held as follows: "6.5 On the appeal by Revenue on the issue of incentives received by the appellant from the car dealer, we find 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 of 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 manufacturers 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/institutions to the dealers. The issue is settled in the case of Sai Service Station (supra). Therefore, we reject the appeal of the department." 8.4 We further find that the Tribunal has held in the case of Autobahn Enterprises Pvt. Ltd. (supra) that the dispute pertaining to discounts offered to customers have attained finality in favour of the assessee. The relevant paragraphs of the said o....
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....tives received by the appellant from the car dealer, we find 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 of 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 manufacturers 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/institutions to the dealers. The issue is settled in the case of Sai Service Station (supra). Therefore, we reject the appeal of the department." and In re Sai Service Station Limited it was held that "14. In respect of the incentive on account of sales/target incentive, incentive on sale of vehicles and incentive on sale of spare parts for promoting and marketing the products of MUL, the contention is that these incentives are in the form of trade discount. The assess....