My Car (Pune) Pvt Limited Vs Pr. Commissioner Customs (CESTAT Mumbai)
CESTAT Mumbai held that the discount/ commission/incentives given for sale of cars cannot be treated as compensation received by the appellant for any services provided to the car manufacturer.
Facts- The appellants are engaged in sale and purchase of motor cars of M/s. Maruti Suzuki India Ltd., (MSIL) under the brand name “Maruti”, since March 2007. They are also running ‘authorised service station’ for Maruti vehicles sold by them and also for the vehicles sold by other dealers in India. They have rented out some portion of the premises on lease.
On scrutiny of the appellant’s records during an Audit conducted by the Department, as well as on the basis of Audit report and the ST Returns filed, it appeared that the appellants had short paid service tax.
Accordingly, show cause notice proceedings were initiated by the Department demanding service tax along with interest and penalty. The Commissioner adjudicated the case confirming the adjudged demands of service tax besides imposition of penalty. Being aggrieved, the present appeal is filed.
Conclusion- We find it difficult to accept the conclusion arrived at in the impugned order that all the discounts/commission/incentives given by the manufacturer for the various types of targets achieved in terms of the number of vehicles sold under a particular model/category, consistent achievement of targets by each quarter, exchange bonus etc., are to be treated as compensation for the services rendered by the appellants by way of popularization of sales and purchase of the cars of the manufacturer. The element of sales promotion or marketing services is involved only when the appellants provide some service to the end customer in sale of the cars. If the discounts/commission/incentives are given in terms of the specific schemes or an agreement entered by the manufacturer of car with the appellants, then such transaction cannot be overstretched to categorize it as service for the purpose of charging service tax.
Held that the discount/ commission/incentives given for sale of cars in the case before us, is no way comparable to services provided to customers at “free of charge” for which reimbursement are given by the car manufacturer. Such amounts cannot be treated as compensation received by the appellant for any services provided to the car manufacturer.
FULL TEXT OF THE CESTAT MUMBAI ORDER
This appeal has been filed by M/s My Car (Pune) Private Limited, Pune (referred to as Appellants) against the Order-in-Original No. PUN-EXCUS-001-PR.COM-094-15-16 dt. 19.01.2016 (referred to as impugned order) passed by the learned Principal Commissioner, Customs, Central Excise & Service Tax, Pune-I Commissionerate, Pune.
2.1. Briefly stated, the facts of the case are that the appellant herein is registered with the jurisdictional Commissionerate under service tax registration No.AAECM2713MST002 for providing taxable services under the category ‘Authorized service station’, ‘Business auxiliary service’ and ‘Renting of immovable property’ enumerated under Section 65 (105) of the Finance Act, 1994.
2.2. The appellants are engaged in sale and purchase of motor cars of M/s. Maruti Suzuki India Ltd., (MSIL) under the brand name “Maruti”, since March 2007. They are also running ‘authorised service station’ for Maruti vehicles sold by them and also for the vehicles sold by other dealers in India. They have rented out some portion of the premises on lease. On scrutiny of the appellant’s records during an Audit conducted by the Department, as well as on the basis of Audit report No.59/2012-13 (Para1) dated 04.05.2012 and the ST Returns filed, it appeared that the appellants had short paid service tax during the period 2007-2008 (October, 2007 to March, 2008) to 2012-2013 (upto June, 2012). Accordingly, show cause notice proceedings were initiated by the Department demanding service tax along with interest and penalty vide Show Cause-Cum-Demand Notice No.53/ST/Gr.VII/COMMR./ ADJ/2013 dated 22.4. 2013. Upon consideration of the reply of the appellant dated 9.7.2013 and after giving personal hearing to the appellant on 05.09.2013, the Commissioner adjudicated the case confirming the adjudged demands of service tax besides imposition of penalty vide Order-in-Original No. PUN-EXCUS-001-COM-029-13-14 dated 07.11.2013 as follows:
