Vipul Motors Private Limited Vs Principal Commissioner of CGST & Central Excise (CESTAT Delhi)
Incentive & Discounts on target-based milestones from manufacturers not a consideration for services under BAS: CESTAT Delhi
The CESTAT, New Delhi in the case of M/s Vipul Motors Pvt. Ltd. v. Principal Commissioner of CGST & Central Excise, Jaipur-I [Final Order No. 50957–50958/2025, dated July 02, 2025] held that incentives/ discounts received by car dealers from manufacturers are not taxable under Business Auxiliary Service, being transactions on a principal-to-principal basis.
Facts:
M/s Vipul Motors Pvt. Ltd. (“the Appellant”), an authorised dealer of Maruti Suzuki India Ltd. (“MSIL”), received various target-based incentives, reimbursements, and trade discounts from MSIL for the period from October 2013 to June 2017. The Department treated these receipts, amounting to ₹22.05 crores, as consideration for sales promotion services taxable under the category of “Business Auxiliary Service” under Section 65(19) of the Finance Act, 1994.
A show cause notice was issued invoking the extended period of limitation, which culminated in an Order-in-Original confirming service tax demand of ₹3,00,54,304 along with interest and penalty.
The Appellant contended that no service was rendered to MSIL, and the relationship was on a principal-to-principal basis. Being aggrieved, the Appellant preferred an appeal before the CESTAT.
