CESTAT Sets Aside Service Tax Demand on Dealer Incentives, Holds Payments Not Taxable as Business Auxiliary Service [Read Order]
Referring to its earlier rulings and the precedent set in Sai Service Station Ltd [2014 (35) STR 625 (Tri.-Mumbai)], the Tribunal ruled that the service tax demand was not sustainable
![CESTAT Sets Aside Service Tax Demand on Dealer Incentives, Holds Payments Not Taxable as Business Auxiliary Service [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/CESTAT-CESTAT-Mumbai-Service-Tax-Demand-on-Dealer-Incentives-TAXSCAN.jpg "CESTAT Sets Aside Service Tax Demand on Dealer Incentives, Holds Payments Not Taxable as Business Auxiliary Service [Read Order]")
The Mumbai Bench of Customs,Excise and Service Tax Appellate Tribunal (CESTAT) sets aside service tax demand on dealer incentives, holding payments not taxable as business auxiliary service. Jaika Motors Pvt Ltd,appellant-assessee,challenged a tax liability of ₹ 2,78,35,520 for providing ‘business auxiliary service’ during the period from 1st April 2014 to 31st March 2015. The...
The Mumbai Bench of Customs,Excise and Service Tax Appellate Tribunal (CESTAT) sets aside service tax demand on dealer incentives, holding payments not taxable as business auxiliary service.
Jaika Motors Pvt Ltd,appellant-assessee,challenged a tax liability of ₹ 2,78,35,520 for providing ‘business auxiliary service’ during the period from 1st April 2014 to 31st March 2015. The demand, raised under section 73 of the Finance Act, 1994, included interest under section 75 and penalties. It was based on incentives received by the appellant from M/s Tata Motors Ltd.
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The assessee's Chartered Accountant argued that the issue had been settled by the Tribunal's final orders in Jaika Motors Ltd v. Commissioner of Central Excise, Nagpur – II, which disposed of the appeal against the order of the Commissioner of Customs & Central Excise, Nagpur – II for the period 2013-14, and in Jaika Motors Ltd v. Commissioner of Central Excise, Nagpur, which disposed of the appeal against the order of the Commissioner of Central Excise, Nagpur.
The two member bench comprising Ajay Sharma (Judicial Member) and C J Mathew (Technical Member), after hearing the Authorized Representative, referred to its earlier decision in Jaika Motors Ltd and relied on the ruling in Sai Service Station Ltd [2014 (35) STR 625 (Tri.-Mumbai)].
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The tribunal found the issue had been settled in the assessee's favor in a previous case, where the service tax demand was set aside. As a result, the CESTAT ruled the demand against the assessee was not sustainable, set aside the order, and allowed the appeal with any consequential relief.
To Read the full text of the Order CLICK HERE
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