The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the demand for service tax of approximately 3.5 crores which was imposed on the services of maintenance and repair of vehicles on the ground of limitation. The Bench granted relief to Ford India Private Limited by quashing the demand for service tax.
Ford India Pvt. Ltd, the appellant assessee are manufacturers of cars and had obtained service tax registration for the services rendered by them the cars manufactured by the assessee are sold to Authorised Dealers (dealers), who in turn sell the cars to the ultimate buyers and the assessee was a service provider to the ultimate buyers of the cars as it was a contract between the assessee and the ultimate buyer of the car and the dealer.
The assessee appealed against the order passed by the Commissioner for confirming the demand for service tax of amount Rs.3,89,87,290/- along with the imposition of penalty and interest.
Raghavan Ramabhadran, the counsel for the assessee contended that the extended warranty plans are composite contracts involving labor by way of repairs and material by way of parts being replaced and under the service tax regime, taxability on the service tax portion of a composite works contract was made taxable for the first time with effect from the date of 01.06.2007.
Further submitted that the demand of service tax raised by the department was not as per the law and which was time-barred by limitation and liable to be deleted.
M. Ambe, the counsel for the department relied on the decisions made by the lower authorities and contended that the assessee had indulged in a misstatement of facts with an intent to evade payment of service tax, thereby attracting provision to section 73(1) of the Finance Act, 1994.
The Bench observed that after the insertion of section 65B(54) in the Finance Act from 01.07.2012 onwards, the definition of ‘works contract’ was expanded to include repair and maintenance services of movable properties also and the composite contracts for repair and maintenance of motor vehicles are leviable to service tax from 01.07.2012 onwards and the demand for service tax was time-barred.
The two-member bench comprising P.Dinesha (Judicial) and Ajit Kumar (Technical) quashed the demand for service tax and penalty imposed on the assessee while allowing the appeal filed by the assessee.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
