Nimbus Motors Pvt. Ltd. Vs Commissioner of Central Goods & Services Tax (CESTAT Allahabad)
CESTAT Allahabad held that booking cancellation charges, is in nature of compensation, are not consideration for service and hence no service tax chargeable on the same. Accordingly, demand on booking cancellation charges not sustained.
Facts- The Appellant was registered with Service Tax Department for providing “Business Auxiliary Services”, Repair/Reconditioning, Restoration or Decoration or any other similar Services of Motor Vehicles. The Appellant was appointed as an authorized dealer of M/s Hyundai Motors India Ltd.
It was alleged that the Appellant was not paying Service Tax on incentives/discounts received from HMI, cancellation charges of booking made by customers for purchase of motor vehicles and commission received from banking and other financial institution for processing of loan etc.
The investigation culminated into issuance of Show Cause Notice dated 16.04.2019 for demand of Service Tax of Rs.1,34,60,732/- along with interest and penalty u/s. 76, 77 & 78 of the Finance Act, 1994. The SCN was adjudicated by the Joint Commissioner, CGST, Meerut and the demand was confirmed vide Order-in-Original No.43/JC/ST/Noida/2020-21 dated 27.01.2020 along with interest and imposition of equal penalty.
Commissioner (Appeals) modified the order by dropping the demand on incentive/discount. However, the demand of Service Tax on cancellation charges was confirmed. Hence, the present appeal before the Tribunal.
