Commissioner Of Central Excise & ... vs M/S. Automotive Manufactures Ltd
- CitationAppeal No. ST/175/2012-Mum
Ratio decidendi
The rule this decision rests on
Where a dealer provides three free services under warranty to customers who pay no service charge, and the cost is absorbed in the dealer's margin paid by the manufacturer, no service tax is leviable on those services in the hands of the selling dealer, since no consideration is received from the service recipient; any taxable transaction would lie only in the internal arrangement between the selling dealer and the servicing dealer, which is not the transaction the show cause notice assessed.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
(Arising out of Order-in-Appeal No. AKP/222/NSK/2012 dt.30.12.2011 passed by the Commissioner (Appeals) Central Excise & Customs, Nashik)
For approval and signature: Honble Mr. P.S.Pruthi, Member (Technical)
Honble Mr. Ramesh Nair, Member (Judicial)
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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
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Commissioner of Central Excise & Customs, Nashik : Appellant
VS
M/s. Automotive Manufactures Ltd., : Respondent
Appearance
Shri S.L. Kaloriya, Assistant Commissioner (A.R.) for Appellant
Ms. Puloma Dalal, C.A. for respondent
CORAM:
Mr. P.S.Pruthi, Member (Technical) Mr. Ramesh Nair, Member (Judicial)
Date of hearing :28/10/2015 Date of decision : 28/10/2015
ORDER NO.
Per : P.S. Pruthi
This case concerns the issue of leviability of service tax on the three free services provided by the respondent who are an authorized dealer of M/s. Maruti Udyog Ltd. These services are provided under the warranty period. There is no dispute on the fact that service charges are not recovered from the customers, as the practice is to include such charges, if any, in the dealers margin which is given by the manufacturer to the dealer. The respondent relies on the Tribunal judgment in the case of K.P. Automobiles Pvt. Ltd. Vs. Commissioner of C.Ex. Jaipur-I 2009 (13) STR 389 (Tri.-Del.), Indus Motor Co. V. Commissioner of C. Ex. 2008 (12) STT 112 (Bang. CESTAT), ASL Motors Pvt. Ltd. Vs. Commr. of C. Ex. & ST, Patna 2008 (9) STR 356 (Tri.-Kolkata).
2. Revenue has tried to distinguish the facts of these judgments from the facts in the present case. The Ld. AR refers to Para 50 of the Agreement between M/s. Maruti Udyog Ltd. and the respondent which states that-
The Dealer shall provide 3 free services to the Retail customers. In the event of any free service as prescribed in schedule being rendered or provided by another Dealer or MASS (in this clause referred to as servicing Dealer) other than who sold the vehicle (in this clause referred to as Selling Dealer) the Selling Dealer shall promptly pay the bills for free services of the servicing Dealer. If such payments is delayed beyond six weeks of receipt of the claim by the Selling Dealer, MSIL shall be entitled to debit the Selling Dealer and credit the Servicing Dealer with the like amount which may include a penalty component to be decided by MSIL.
According to Ld. AR, the Agreement shows that there is a definite value of the services involved because in the cases where the services are provided by another dealer, the Selling Dealer shall pay the Bills for the free services provided by the servicing dealer.
3. We have carefully considered the submissions of both sides. The contents of para 50 of the Agreement between the Maruti Udyog Ltd. and respondent only state that for the services rendered by the Servicing Dealers, the Selling Dealer shall pay the bills of the free services. We find that this is an internal arrangement between two dealers and has nothing to do with the payment for the service provided by the Selling Dealer to the customer of the car. The show cause notice has been issued to the Selling Dealer demanding service tax for the services rendered to the Customer. As far as this transaction is concerned, as noted in the judgments above, the value of services is included in the dealers margin and no service charge is received from the service recipient. If at all, in the light of the above, it is the transaction between the two dealers which could have been subject to tax. The judgments cited above squarely apply in the facts of the present case. Therefore we uphold the impugned order and dismiss the appeal of the Revenue.
(Pronounced & Dictated in court)
(Ramesh Nair) Member (Judicial)
SM.
(P.S.Pruthi) Member (Technical)
2
Appeal No. ST/175/2012-Mum
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