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Sagar Automobiles V/S Commissioner of Service Tax, Bangalore-I

    Final Order No. 21376/2017 in Appeal No. ST/70/2007-DB

    Decided On, 07 August 2017

    At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore

    By, THE HONORABLE JUSTICE: S.S. GARG
    By, MEMBER AND THE HONORABLE JUSTICE: B. RAVICHANDRAN
    By, MEMBER

    For Petitioner: Dayanand, CA



Judgment Text


1. The appeal is against order dated 31-2-2006 of Commissioner (Appeals), Mangalore. The appellants are an Authorized Service Station for M/s. Maruti Udyog Limited. During the course of their business they have also sold extended warranty facility (coupons) to the vehicle buyers on behalf of the manufacturer (Maruti Udyog). The extended warranty facilitates the owner of the vehicle to avail warranty on motor vehicle for a period beyond normal warranty. Such extended warranty coupons are provided to the owners on payment of a fixed consideration, as decided by M/s. Maruti Udyog. The appellants receive a part of that money as their commission from Maruti Udyog. The dispute in the present case is relating to the tax liability of the appellant on the total value of extended warranty coupon, sold by the appellant to the car owners. The Revenue considered this as a part of their taxable activity under the heading "Authorized Service Station" of motor cars. Proceedings initiated against the appellant concluded in the original order, confirming Service Tax liability of Rs. 7,09,142/- (Rupees Seven Lakhs Nine Thousand One Hundred and Forty-Two only) with penalty on equivalent amount under Section 78 and further penalty under Section 76 of the Finance Act, 1994. On appeal the original order was confirmed. The learned counsel for the appellant submitted that their activity of selling extended warranty coupons were considered under the category of tax entry for 'Authorized Service Station'. This tax entry under Section 65(105)(zo) talks about any service provided to a customer, by an authorized station, in or in relation to any service or repair of motor cars, in any manner. In the present case, they are not providing any service to the customer who is the owner of the motor vehicle.

2. We have heard both the parties and perused the appeal records. The original authority held that the appellants collected extended warranty amount on behalf of M/s. Maruti and the said consideration is liable to be taxed as authorized service station category. We find that the original authority misdirected herself in examining the facts of the case. First of all, the appellant is not providing service of authorized station to Maruti, as a customer. Services by authorized service station is always to a customer who brings in his vehicle for any service or repair in any manner. It is apparent that it is not Maruti who is bringing in any vehicle any service or repair as a customer, so that the activity can be brought under Section 65(105)(zo). The

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services, if any, rendered by the appellant to Maruti as a client in the present arrangement cannot be covered in the above mentioned tax entry. In view of the above discussion, we find the impugned order is without merits and accordingly we allow the appeal by setting aside the same.
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