CESTAT Quashes Service Tax Demand on Receiving Incentive Amount on ground of Non-inclusion of Activity under ‘BAS’ [Read Order]

The Mumbai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the service tax demand on receiving incentives amount on the ground of non-inclusion of activity under ‘Business Auxiliary Service’ (BAS). 

Jaika Motors Ltd, the appellant assessee was a dealer of Tata Motors engaged in the sale of cars and providing service as an authorized service station to the car purchasers of Tata Motors as well as other related services including arrangement of finance, etc. against which it had been receiving commission. 

The assessee appealed against the order passed by the adjudicating authority for confirming the service tax demand along with interest and penalties under Sec 77 and 76 of the Finance Act, 1994 under the heading ‘Business Auxiliary Service’ by the Commissioner on the amount received by it as an incentive in respect of the sale of goods was assailed in this service. 

Shailendra Jain, the counsel for the assessee contended that the case incentives were paid in connection with the sale of excisable goods by the manufacturer to the dealer which was held as a ‘trade discount’. 

Also submitted that the incentives were given to the assessee and the same can’t be considered as paid against any service since paid against the sale of goods and thus the demand of service tax cannot be sustained. 

S. B. P. Sinha, the counsel for the department relied on the decision made by the lower authorities and contended that the service tax demand raised by the revenue was as per the law and liable to be sustained. 

The Bench observed that in the case of Sai Service Station Ltd, the court held that the incentives were paid in connection with the sale of excisable goods by the manufacturer to the dealer which were held as ‘trade discount’ and cannot be considered as any payment to any taxable services. 

The two-member bench comprising Suvendu Kumar Pati (Judicial) and Anil G. Shakkarwar (Technical) quashed the service tax demand while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates