No Service Tax on Discount from Vehicle Manufacturer by Dealer: CESTAT [Read Order]

The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), ruled that no service tax on Discount from Vehicle Manufacturer by Dealer.

The issue involved in the present case is that whether the discount given by M/s. Maruti Suzuki India Ltd. to the appellant,B M Autolink in connection with sale of vehicles which was further sold by the appellant on principal-to-principal basis has to be considered as service charges towards Business Auxiliary Service and the same is liable for service tax or otherwise.

Vikas Mehta, Consultant appearing on behalf of the appellant at the outset submits that this issue is no longer under dispute as this tribunal in various judgments decided the same issue in favour of the assessee.

A Bench consisting f Ramesh Nair, Judicial Member and Raju, Technical Member primarily relied on the judgment in Rohan Motors Ltd. v. Commissioner, wherein it was held that the carrying out of activities like purchasing vehicles from TML and sells the same to the buyersby the appellant is for the mutual benefit of the business of the appellant, as well as the business of TML.

The position in this regard is fairly settled as held by the Supreme Court in the matter of case of Moped India Ltd. vs. CCE.The amount of incentives and discount support received on such account cannot, therefore, be treated as consideration for any service. The incentives and discount support received by the appellant cannot, therefore, be leviable to service tax.

The Bench observed that “The transaction between M/s. Maruti Suzuki India Ltd. and the dealer and subsequently sale transaction between the dealer and the customs are purely on principal-to-principal basis. The vehicle manufacturer M/s. Maruti Suzuki India Ltd. on the basis of yearly performance of sale grants the discount to the dealer, this discount is nothing but a discount in the sale value of the vehicle sold throughout the year therefore, these sales discount in the course of transaction of sale and purchase of the vehicles hence, the same cannot be considered as service for levy of service tax.”

“The amount received as discount/incentive from the vehicle manufacturer by the appellant being the dealer is not liable to service tax” the Tribunal reiterated.

To Read the full text of the Order CLICK HERE

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