Mahindra Reva Electric Vehicles Private Limited Vs Commissioner of Service Tax (CESTAT Bangalore)
The appeal concerned the demand of service tax on the appellant under the Reverse Charge Mechanism (RCM) under Section 66A of the Finance Act, 1994 and liability under the category of “Authorised Service Station” under Section 65(105)(zo) read with Section 65(9). The appellant, engaged in the manufacture of electric cars, was issued a demand for the period from April 2005 to March 2008 on expenditure incurred in foreign exchange and on services allegedly falling within the Authorised Service Station category. The adjudicating authority confirmed the demand for consultancy services and Authorised Service Station services and imposed penalties. The Commissioner (Appeals) subsequently set aside only the penalty under Section 76 while otherwise sustaining the order.
The appellant contended that the adjudicating authority invoked Section 66A without identifying the taxable services involved or establishing that the services were imported into India in accordance with the Taxation of Services (Provided from Outside India and Received in India) Rules, 2006. It submitted that legal services became taxable only from 1 September 2009 and therefore services received earlier were not liable to tax. It further argued that testing, inspection and certification services had been performed outside India and consequently were not received in India for the purposes of Section 66A. The appellant also contended that product development expenditure did not fall under any taxable service and that one component represented only a provision reversed in the books without any consideration being paid.
