Cce, Kanpur vs M/S Cross Road Auto Pvt. Ltd

(Arising out of the Order-in-Appeal No. 288-ST/APPL/KNP/2009 dated 23/09/09 passed by the Commissioner (Appeals), Customs & Central Excise, Kanpur).

For approval and signature:

Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 26 of the CESTAT (Procedure) Rules, 1982?

2 Whether it should be released under Rule 26 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3 Whether their Lordships wish to see the fair copy of the Order?

4 Whether Order is to be circulated to the Departmental authorities?

CCE, Kanpur . Appellant

vs.

M/s Cross Road Auto Pvt. Ltd. . Respondent

Appearance:

Shri B.B. Sharma, A.R.  for the appellant/Revenue.

Shri Ankit Vishnoi, Advocate  for the Respondent.

Coram: Honble Mr. Justice G. Raghuram, President

Honble Mr. H.K. Thakur, Technical Member

Final Order No. 52193/2015 dated 07/07/2015

Per. H.K. Thakur :-

This appeal has been filed by the Revenue against OIA No. 288-ST/APPL/KNP/2009 dated 23/09/2009. Under this OIA First Appellate Authority has set aside the confirmation of demand with respect to free own services provided by the dealers of M/s General Motors India Pvt. Ltd.

2. Shri B.B. Sharma (AR) appearing on behalf of the Revenue argued that respondent get amounts paid from M/s General Motors India Pvt. Ltd. in the form of dealers margin. That as per CBEC Circular No. 96/7/2007-ST dated 23/08/2007 service tax is payable where a service is provided by the dealers and consideration for the same is received from the manufacturer Learned AR thus strongly emphasised that order passed by the First Appellate Authority should be set aside and the order-in-original dated 26/08/2009 passed by the Adjudicating Authority should be restored.

3. Shri Ankit Vishnoi (Advocate) appearing on behalf of the respondent argued that free own services are provided by the dealers for which no consideration is received from the recipient of the services. That no amount is paid by M/s General Motors India Pvt. Ltd. for the free own services provided by the dealers. It was thus his case that no service tax is payable by the respondent and their appeal has been correctly allowed by the First Appellate Authority. Learned Advocate relied upon the following case laws in support of his arguments :-

(i) CCE, Indore vs. Jabalpur Motors Ltd. reported in 2014 (36) S.T.R. 1160 (Tri.  Del.) ;

(ii) Hydro S&S Industries Ltd. vs. CCE, Pondy reported in 2010 (17) S.T.R. 32 (Tri.  Chennai) ;

(iii) ASL Motors Pvt. Ltd. vs. CCE & ST, Patna reported in 2008 (9) S.T.R. 356 (Tri.  Kolkata) and

(iv) Pillai & Sons Motor Co. vs. CCE, Trichy reported in 2009 (14) S.T.R. 844 (Tri.  Chennai).

4. Heard both sides and perused the case records. The issue involved in the present proceedings is whether respondent is liable to pay service tax on free own services provided by the dealers. First Appellate Authority has relied upon the case law of ASL Motors Pvt. Ltd. vs. CCE & ST, Patna reported in 2008 (9) S.T.R. 356 (Tri.  Kolkata) to hold that no service tax liability is attracted. As per the grounds of appeal filed by the Revenue it is stressed that CBEC Circular requires service tax to be payable on such services if the consideration is received by the dealers from the manufacturer. As observed from the case records it has not been brought out by Revenue whether any consideration is received by the dealers from the manufacturer or the buyers of vehicles. In the case of CCE, Indore vs. Jabalpur Motors Ltd. reported in 2014 (36) S.T.R. 1160 (Tri.  Del.) CESTAT, Delhi held as follows under similar factual matrix :

4. We have considered the facts of the case Authorised Service station is defined as under :

 authorised service station means any service station, or centre, authorised by any motor vehicle manufacturer to carry out any service, repair, reconditioning or restoration of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer.

and the related taxable service is defined as a service rendered to a customer, by an authorised station, in relation to any service, repair, reconditioning or restoration of motor cars, light motor vehicles or two wheeled motor vehicles in any manner.

5. It is evident from the above definition that the liability to service tax is on account of the said service provided to a customer. The service is provided to the car buyers who are the customers. For the free services, no amount is charged from the customers. As regards the contention that amount towards the free services is reimbursed by Maruti Udyog Ltd., it is seen that Maruti Udyog Ltd. have categorically stated that they do not reimburse any amount towards such free services to the dealers. The respondents have also stated that providing such free services is part of the functions and duties of dealers who are entitled to the dealership commission. Also the free services are rendered to the car buyers and not to M/s MUL and the car buyers pay nothing therefore. Seen in this light it is evident that the demand of service tax as per column 5 of the table above is misconceived. Coming to the demand of service tax on the amount received on account of salary of drivers of vans used for providing mobile service to the car owners shown in column 4 of the table, it is evident that the customer in this case is the car owner who is the recipient of service. M/s MUL receive no service nor are M/s MUL, the respondents customers. Thus the respondents have not provided the service of authorised service station to them (i.e. M/s MUL). Accordingly this amount cannot be made liable to service tax under the category of authorised service station service.

5. In view of the above observations and settled proposition of relied upon case laws, appeal filed by the Revenue is dismissed.

(Operative part of the order pronounced in the open court.)

andl

(Justice G. Raghuram)

President

(H.K. Thakur)

Technical Member

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