AUTOMOTIVE MANUFACTURERS P. LTD. Vs. COMMR. OF C.E. & C.
LAWS(CE)-2015-1-141
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on January 16,2015

Automotive Manufacturers P. Ltd. Appellant
VERSUS
Commr. Of C.E. And C. Respondents




JUDGEMENT

P.R.CHANDRASEKHARAN, J. - (1.)
(2.)THE appeal arises from Order -in -Revision No. 04/2009/ST/C, dated 31 -7 -2009 passed by the Commissioner of Central Excise & Customs, Nagpur. Vide the impugned order, the learned Commissioner has confirmed a service tax demand of Rs. 4,86,299/ - along with interest thereon apart from imposing penalties under Sections 76, 77 and 78 of the Finance Act, 1994 on the appellant, M/s. Automotive Manufacturers Private Ltd., Nagpur, by setting aside the order of the adjudicating authority vide order No. 90/STC/2007 -08 dated 13 -3 -2008. Aggrieved of the same, the appellant is before us. The learned counsel for the appellant submits that the appellant is an authorised dealer of Maruti Udyog Ltd., and are registered with the department as an authorised service station for Maruti cars and they have been discharging/Service Tax liability on servicing/repairing of the vehicles undertaken by them. While repairing or servicing of the vehicles, they also sometimes used parts on which sales tax/VAT liability is discharged. The parts and components are procured from M/s. Maruti Udyog Ltd. and they have lifted these parts from the warehouse/depots of Maruti Udyog Ltd. For bringing these parts into their service station, they have to incur octroi and other local taxes, freight, loading and unloading charges, etc. Therefore, while selling these parts to the clients as part of servicing activity, they include the cost incurred by them towards freight, loading, unloading, etc., as 'handling charges' and pay sales tax on the goods on the value inclusive of handling charges. Sometime they sell the parts as such without undertaking any service/repair activity and in such cases also they collect handling charges and discharge the sales tax liability. The present demand is in respect of handling charges collected by the appellant as part of the value of the goods when a composite, activity of sale as well as services are involved on the ground that the handling charges are towards service charges and hence they are liable to Service Tax. The learned counsel submits that the handling charges form part of the value of the goods sold on which sales tax/VAT liability has been discharged and this is towards the freight/loading and unloading charges involved in handling of the automobile components procured from M/s. Maruti Udyog Ltd. and they have nothing to do with the service/repair of the motor vehicles of the Maruti Suzuki. As per the Board's Circular No. 96/7/2007 -ST dated 23 -8 -2007 it has been clarified that Service Tax is not leviable on a transaction treated as a sale of goods and subject to levy of sales tax/VAT when spare parts are sold by a service station during the servicing of vehicles. Even otherwise, what is liable to Service Tax is only the consideration received for servicing of the vehicles and not the consideration received for sale of goods. Therefore, the impugned demands are not sustainable.
2.1 Reliance is placed on the decisions of this Tribunal in the case of Dynamic Motors - : 2011 -TIOL -1876 -CESTAT -DEL : 2012 (26) S.T.R. 145 (T), Ketan Motors Ltd. v. Commissioner of Customs, Central Excise & Service Tax, Nagpur - : 2014 (33) S.T.R. 165 (Trib. -Mum.) and a few other decisions in support of the above contentions. Accordingly, it is prayed that the impugned demand be set aside.

2.2 The learned counsel also points out that the adjudicating authority had examined this matter at length in his order dated 13 -3 -2008 and had concluded that the handling charges are part of the sale value of the goods on which sales tax/VAT liability has been discharged and hence not leviable to sales tax. This also supports the proposition that the impugned demands are not sustainable.

(3.)THE Dy. Commissioner (AR) appearing for the Revenue reiterates the findings of the Revisionary authority and submits that since the handling charges are service rendered, service tax is leviable and accordingly, seeks to sustain the demands.
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