Maruti Suzuki India Ltd. Vs Commissioner of Service Tax (CESTAT Chandigarh)
Service Tax payable under reverse charge when reimbursable expense incurred by distributor on providing service on behalf of taxable person
The CESTAT, Chandigarh in the case of M/s. Maruti Suzuki India Ltd. v. Commissioner of Service Tax, Delhi [Service Tax Appeal No. 581 of 2011 dated April 16, 2024] partly allowed the appeal filed by setting aside the penalty and confirming the demand of tax, thereby holding that, Service Tax is payable under reverse charge when reimbursable expense incurred by distributor on providing service on behalf of the taxable person for business purpose under Business Auxiliary Services.
Facts:
M/s. Maruti Suzuki India Ltd. (“the Appellant”) is engaged in the manufacturing of motor vehicles and parts which are exported by the Appellant to the distributors/dealers in various countries with whom the Appellant has entered into several distributorship agreements (“Agreement”), wherein as per the agreement, the distributors are authorised to sell and distribute the vehicles manufactured by the Appellant. Also, the distributors are providing after sales services to the customers relating to the products sold. As per the terms of the Agreement the distributor is required to fulfil the warranty claim during the warranty period to the overseas customers. The Appellant reimburses the various expense, including Export warranty, product recall charges and goodwill warranty incurred by the distributor.
