The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that no service tax on incentive on sale of vehicles as it is not a business auxiliary service.
The bench of Binu Tamta (Judicial Member) and Rajeev Tandon (Technical Member) has observed that no liability to Service Tax on activity relating to sale of spare parts for the car, how per se the activity relating to car sales could be taken as one leviable to Service Tax.
The appellant/assessee is an authorized dealer of Honda Cars (HCIL). The DGCEI during the year initiated certain investigations regarding consumer specific schemes (incentive/discount schemes) floated and implemented by HCIL for the purpose of levy of service tax for the period 01.10.2012 to 30.06.2017.
It was observed by the investigating agency that during the aforesaid period the appellant had received monetary considerations for providing services through credit notes and had made adjustments of accounts during the relevant point in time.
The credit notes received by the appellant were credited to their purchase account and were netted out in the said accounts resulting in reflection of only net portion of such income under the category of “other income” in the balance sheet.
The assessee contended that the lower authorities failed to take cognizance of the law as enunciated on the subject of reimbursement of discount passed on to the buyers. The adjudicating authority did not later on give any finding on the submissions that the discounts were relating to sale of goods and not rendition of a service and were an admissible deduction from the sale price and hence could not be subjected to service tax.
The department contended that the activity of promoting and selling cars and other products manufactured by HCIL, achieving targets and in return were granted discounts/incentives offered by HCIL are not covered under the negative list under section 66D of the Finance Act, 1994. As there was no specific exemption, the appellants were liable to pay service tax on such incentives, credits received.
The tribunal while allowing the appeal held that sale/target incentive/incentive on sale of vehicles and incentive on sale of spare parts received by assessee, could not be considered as rendering of business auxiliary service.
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Case Details
Case Title: M/s. Capital Cars Pvt.Ltd. Versus Commissioner of Central Goods & Service Tax & Central Excise, New Delhi
Case No.: Service Tax Appeal No.51048 of 2020
Date: 12.12.2024
Counsel For Appellant: Sameer Sood
Counsel For Respondent: Anand Narayan
