Relief to Audi Motors: CESTAT sets aside Demand of Service Tax on Incentives for achieving Targets [Read Order]

The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) granted relief to the premium car company M/s Audi Motors Private Limited.

The bench held that no service tax demand shall be sustained against the incentives for achieving the sales target.

The appeal was filed against the impugned order passed by the commissioner confirming the demand of service tax with interest and penalty.

The issue deliberated in this appeal was whether the incentives for achieving the sales target can be considered as commission for providing "business auxiliary service‟ and, therefore,  subjected to levy of service tax.

The tribunal observed the decision of M/s DD Motors Vs Commissioner of Central Excise, Uttar Pradesh, in which it has been held that "the incentive received by the appellant from M/s Maruti Udyog Ltd. for achieving certain sales target for a month or for a season is in the form of a trade discount and same cannot be considered as a service under the category of the business auxiliary service for the levy of service tax."

The two-bench members composed of Justice Dilip Gupta (President) and Hemambika R. Priya (Technical Member) relied on the decision of M/s DD Motors and Rohan Motors Limited. This held that the order of the commissioner demanding service tax is not sustainable.

The CESTAT hears appeals against orders passed by the lower authorities in matters relating to customs, excise, and service tax.

The Customs, Excise and Service Tax Appellate Tribunal (Procedure) Rules, 1982 states that an appeal must be lodged with CESTAT within 90 days against the aggrieved order.

It was decided by the CESTAT bench of Ahmedabad in the case Aquamarine Exports vs C.C.E. & S.T.-Surat-i, 2022 TAXSCAN (CESTAT) 149 that the commission to agents cannot be subject to service tax in the absence of service providers and the consideration.

To Read the full text of the Order CLICK HERE

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