Infinium Motors Guj Pvt. Ltd. Vs C.S.T. Service Tax (CESTAT Ahmedabad)
CESTAT Ahmedabad held that where during the provision of Authorized Service Station Services, the spare parts and lubricants sold and VAT thereupon was paid the value of such spare parts and lubricants would not attract Service Tax.
Facts- This appeal is filed by the appellant against the order passed by the Principal Commissioner of Central CGST. By the said order, the Commissioner confirmed the demand of Service Tax, demand under Rule 6(3) and demand of Cenvat credit on cement and steel, total amounting to Rs. 54,61,35,679/- and consequent penalty and interest.
The appellant is a licensed/ approved dealer of M/s Toyota Kirloskar Motors Pvt. Ltd. who are manufacturer of Toyota brand vehicles and also spare-parts of such vehicles. Accordingly, M/s. Toyota Kirloskar have been selling vehicles as well as spare parts to the appellant under invoices issued on the appellant.
The case of the department is that spare parts and lubricants used while providing the authorized services station service should be included in the gross value of the service and the same is chargeable to service tax?
Conclusion- Held that it is seen that various Benches of this Tribunal have taken a consistent view in the identical facts of the present case that where during the provision of Authorized Service Station Services, the spare parts and lubricants sold and VAT thereupon was paid the value of such spare parts and lubricants would not attract Service Tax. In view of the said judgements, issue involved in the present case is squarely covered. Hence, the demand of Service Tax on the value of spare parts and lubricants is not sustainable in the present case.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
This appeal is directed against Order In Original No. AHM-EXCUS-001- COM-018-24-20-21 dated 11.01.2021 passed by the Principal Commissioner of Central CGST, Ahmedabad South, Ambavadi, Ahmedabad. By the said Order In Original, the learned Commissioner confirmed the demand of Service Tax, demand under Rule 6(3) and demand of Cenvat credit on cement and steel, total amounting to Rs. 54,61,35,679/- and consequent penalty and interest. The issue arising out of the order for our consideration are as under:
(1) Whether price of spare parts and lubricants is includible in value of “Authorized Service Station” services rendered by the appellant?
(2) When M/s Toyota Kirloskar allowed discount in price of vehicles depending upon the quantum of vehicles purchased by the appellant, whether such discount is in the nature of commission and chargeable to service tax under “Business Auxiliary Service” category?
(3) Whether the appellant is liable to pay amount @ 5% or 7% of the trading activity in view of availment of credit on common input services or proportionate reversal of Cenvat attributable to trading business was substantial compliance of Rule 6(3) of Cenvat credit Rules? Whether Rule 6 was applicable to “trading” prior to 04.2011?
(4) Whether Cenvat credit for steel and cement used for construction of showrooms was liable to be recovered from the appellant, though such Cenvat was reversed by the appellant and such reversal was recorded in journal vouchers and books of accounts?
2. The brief facts of the case are that the appellant is a licensed/ approved dealer of M/s Toyota Kirloskar Motors Pvt. Ltd. who are manufacturer of Toyota brand vehicles and also spare-parts of such vehicles. Accordingly, M/s. Toyota Kirloskar have been selling vehicles as well as spare parts to the appellant under invoices issued on the appellant. The appellant has been paying price of such goods to M/s Toyota Kirloskar, the appellant has been selling such vehicles to their customer as a dealer of M/s. Toyota Kirloskar under the appellant’s invoices for which the customers have been paying the price to the appellant. The appellant have also been operating and maintaining an Authorized Service Stations for servicing, repairing etc. of M/s Toyota vehicles and while providing service as the authorized service station, the appellant have also been utilizing certain parts purchased from M/s. Toyota Kirloskar and also lubricants purchased from one M/s Savita Oil Technology Pvt. Ltd. The appellant in turn have been selling such spare parts and lubricants to their customers/clients of their authorized services station on payment of VAT for authorized services station services. The appellant have been issuing one bill to the customers, but the value of services is separately shown in the bill and Service Tax was paid thereon under authorized services station category, and the value of spare parts as well as lubricants were separately shown in the same bill and VAT or sale tax was paid on this component because this part of the transaction was considered to be sale of goods liable for payment of VAT/sales tax. The appellant have not availed Cenvat credit of spare parts and lubricants which were sold during providing the authorized Services station services to their customers. The appellant availed Cenvat credit of input services like Advertising service, Telecommunication services, banking services, Housekeeping services etc., and such credit was utilized for paying Service Tax for Authorized Service Station services, Business Auxiliary services (i.e. commission received of finance and insurance provided to the appellant’s customers) and Rent a Cab Scheme Operator Service. The appellant also availed Cenvat credit for steel and cement used for construction of showrooms, but such credit has been reversed by the appellant. The case of the department is that (1) spare parts and lubricants used while providing the authorized services station service should be included in the gross value of the service and same is chargeable to Service Tax. (2) In the course of trading, vehicles purchased by the appellant from M/s Toyota Kirloskar are discount is provided by M/s Toyota Kirloskar to the appellant on the basis of quantum of vehicles purchased by the appellant. The department treated the said discount as commission and proposed the demand of Service Tax on such commission under business auxiliary services category. (3) Since, the appellant have availed the Cenvat credit on common input services demand was made @ 5%/6%/7% of the value of the trading business of the appellant interms of Rule 6(3) of Cenvat credit Rules for the period prior to 01.04.2011 and thereafter also. (4) The appellant is not entitled for Cenvat credit on the cement and steel used for construction of their showrooms.
On the above issues the Adjudicating Authority has adjudicated 7 show cause notices by one common impugned order dated 11.0 1.2021. The detail of the demand as per show cause notice is as under:
