T.A.F.E Access Ltd. Vs Commissioner of GST & Central Excise (CESTAT Chennai)
CESTAT, Chennai in the case of M/s. T.A.F.E Access Ltd. v. Commissioner of GST & Central Excise [Service Tax Appeal No. 526 of 2012 dated May 26, 2023] overturned the order that required the payment of Service Tax on the expenses incurred for spares and materials used in the provision of complimentary services during the warranty period. The CESTAT, Chennai held that the taxpayer is not legally obligated to remit Service Tax on the reimbursement received from the manufacturer for the cost of spares and accessories used for providing free services provided during warranty period.
Facts:
M/s. T.A.F.E Access Ltd (“the Appellant”) an authorized dealers of M/s. Tata Motors (“the Manufacturer”) is engaged in selling of cars and providing free service during the warranty period for the cars sold by them. The expenses for providing free service were reimbursed by manufacturer.
The Appellant was paying service tax on the labour charges but was not discharging service tax on cost of spares which was reimbursed by Manufacturer.
The Assessing Authority vide a Show Cause Notice (“the SCN”) raised the demand to pay service tax on the reimbursement received from the manufacturer towards the supply of parts and accessories during the free warranty and services.
The Appellant filed the reply to the SCN and after considering the reply the Adjudicating Authority confirmed the demand.
Aggrieved by the demand, the Appellant filed an appeal before the Commissioner (Appeal)
who vide Order-in-Appeal No. CMB-CEX APP 101/12 dated May 21, 2012 (“the Impugned Order”) upheld the order passed by the adjudicating authority.
Being aggrieved, this appeal has been filed.
Issue:
Whether the cost of spares and accessories reimbursed by the manufacturer on account of free services provided during the warranty period is leviable to service tax?
Held:
The CESTAT Chennai Service Tax Appeal No. 526 of 2012 held as under:
