The appellant is a dealer. It purchases heavy vehicles from Tata Motors and cars from Hyundai Motors. The said vehicles are sold to customers. A demand of service tax of over Rs.33 crores was raised on the appellant on the ground: (i) the discount/incentive offered by the manufacturer by way of various schemes is consideration for providing business promotion/business auxiliary services; (ii) the free services provided during warranty period are liable to service tax; (iii) sharing of business promotion expenses is providing of business auxiliary service to the manufacturer; (iv) incorrect reversal of CENVAT credit in terms of Rule 6(3A) of the CENVAT Credit Rules, 2004. Hence, appeal against order passed by the Commissioner.
The CESTAT, Mumbai allows the appeal and set aside the demands and penalties. It held: (i) the demands were for period prior to and post negative list regime (i.e. 01.07.2012). Analyzing the statutory provisions along with the dealership agreement, the incentives were in nature of discount offered by the manufacturer which were ultimately passed on the customer. Hence, it cannot be considered as business auxiliary service.
Reliable Automotive Private Limited v. Commissioner of CGST & Central Excise – ST Appeal No. 85129 of 2021 [CESTAT, Mumbai]
