Custom, Excise & Service Tax Tribunal
Autovikas Sales & Service Private ... vs Principal Commissioner, Central ... on 16 February, 2026
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 3
SERVICE TAX APPEAL NO. 50070 OF 2022
[Arising out of Order-in-Original No. Commr(A)/04/2021-22 dated 01.09.2021
passed by the Commissioner (Appeals) of Central Tax, Appeal-II, Delhi]
Autovikas Sales & Service Private Limited ...APPELLANT
12A Shivaji Marg, New Delhi-110015
Vs.
Principal Commissioner, Central Excise ...RESPONDENT
& CGST-Delhi West EIL, Annexe Building, 5th Floor, Bhikaji Cama Place, R. K. Puram West Delhi, New Delhi-110066 And SERVICE TAX APPEAL NO. 50073 OF 2022 [Arising out of Order-in-Original No. Commr(A)/04/2021-22 dated 01.09.2021 passed by the Commissioner (Appeals) of Central Tax, Appeal-II, Delhi] Kuldeep Singh ...APPELLANT Director, M/s Autovikas Sales and Service Pvt. Ltd. 12A Shivaji Marg, New Delhi-110015 Vs. Principal Commissioner, Central Excise ...RESPONDENT & CGST-Delhi West EIL, Annexe Building, 5th Floor, Bhikaji Cama Place, R. K. Puram West Delhi, New Delhi-110066 Appearance:
Present for the Appellant : Dr. Prabhat Kumar and Shri Pralabh Mathur, Advocates Present for the Respondent: Shri V.K. Jain, Authorised Representative 2 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022 CORAM:
HON'BLE MS. BINU TAMTA, MEMBER (JUDICIAL) HON'BLE MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Date of Hearing :16.02.2026 Date of Decision:16.02.2026 Final Order Nos. 50288-50289/2026 BINU TAMTA These two present appeals have been filed by the appellants to assail the impugned Order-in-Original No. Commr(A)/04/2021-22 dated 01.09.2021 passed by the Commissioner (Appeals) of Central Tax, Appeal-II, Delhi wherein the Commissioner had confirmed the service tax demand of Rs. 1,92,26,093/- along with appropriate penalties.
2. The appellant was registered under the provisions of the Finance Act, 1994 with Service Tax Registration No. AADC7132RST001 for providing taxable services including Business Auxiliary Service, Business Support Service, Repair and Maintenance Service and allied services. The appellant discharges service tax on consideration received towards commission from financial institutions for facilitating vehicle financing, commission from insurance companies for arranging vehicle insurance, income from extended warranties, repair and servicing charges, logistics and allied charges recovered from customers, renting of immovable property, free service coupons, and the service component of warranty claims. In the course of its 3 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022 business as an authorized dealer, the Appellant receives discounts/incentives from Tata Motors Limited (TML), categorized as:
(A) Volume-Based Discounts: Off-take discounts linked to purchase targets, additional target incentives, early bird billing discounts, Trinity Bonus based on weekly sales plans, and DEEP incentives for overall performance.
(B) Non-Volume-Based Customer Discounts: Exchange, vintage stock, corporate, and additional cash discounts passed on to customers, shared between TML and the Appellant based on market conditions.
On the basis of investigation, the Department alleged that the discounts/incentives credited by TML to the Appellant constituted consideration for services rendered, classifiable as "service" under Section 65B(44) and as a declared service under Section 66E(e) of the Finance Act, 1994. Accordingly, Show Cause Notice dated 06.02.2019 was issued proposing:-
a) Demand of service tax amounting to Rs. 1,92,26,093/-
(inclusive of cesses) under the proviso to Section 73(1) along with interest and penalty The Show Cause Notice was adjudicated vide Order-in-Original No. 41/GGT/DL West/MG/2020-24 dated 06.07.2020 whereby the Adjudicating Authority:
a) Confirmed the service tax demand of Rs. 1,92,26,093/-
along with applicable interest under Section 75 4 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022
b) Imposed an equivalent penalty under Section 78,
c) Imposed penalty of Rs. 10,000/- under Section 77;
d) Dropped penalty under Section 76; and
e) Imposed penalty of Rs. 1,00,000/- upon Shri Kuldeep Singh (Appellant No.2) under Section 78A.
The Appellant preferred an appeal before the Commissioner (Appeals), GST, New Delhi, which has been rejected vide Order-in-Appeal No. Comm(A)/04/2021-22 dated 01.09.2021. Hence the present appeal.
3. Both sides agree that the issue is no longer res integra and had been decided by the Tribunal in several decisions. Ld Counsel contended that the appellant is not liable to pay service tax on the incentives/discounts reimbursements received from vehicle manufacturers under incentive schemes, as they are not consideration for provision of any services by the appellant to vehicle manufacturers. He relied on the case of Philips India Ltd. v. Collector of Central Excise, Pune1, wherein the Tribunal upheld the disallowance of trade discount claimed by the assessee from the assessable value for levying Central Excise duty charged by theassessee from its dealers in terms of their agreement, where the substantial portion of said 'trade discount' is represented by advertisement expenses and expenses on after sales services incurred by the dealers which were includible in the assessable value. On Appeal, the Hon'ble Supreme Court of India held that the advertisement which the dealer was required to make at its own cost benefited in equal degree the assessee and the dealer and
1. 1997 (91) E.L.T.540 (S.C.) 5 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022 that for this reason the cost of such advertisement was borne half and half by the assessee and the dealer.
3.1 Learned Counsel also placed reliance on the following decisions:
i) Comet Car Sales and Service Private Limited vs. Commissioner of Central Excise & Service Tax- Surat I2;
ii) Shree Ambica Auto Sales and Services v. Commissioner of C.E. & S.T. - Surat-l3;
iii) Prem Motors Pvt. Ltd. v. Commissioner, Central Excise and CGST, Jaipur4;
iv) Reliable Automotive Private Limited v. Commissioner of CGST and Central Excise, Mumbai5,
v) M/s Bimal Auto Agency v. Commissioner of CGST and CX, Dibrugarh Commissionerate6,
vi) Rohan Motors Limited v. Commissioner of Central Excise, Dehradun7,
vii) Jubilant Motor Works (South) Pvt. Ltd. v. The Commissioner of GST & Central Excise, Chennai8,
viii) T.V. Sundaram lyengar & Sons Pvt. Ltd. v. Commr. Of CGST & C.Ex., Madurai9,
2. 2024 (11) TMI 667- CESTAT Ahmedabad
3. 2024(10) TMI 901 - CESTAT Ahmedabad
4. (2023) 4 Centax 308 (Tri. - Del)
5. 2024(4) TMI 66 - CESTAT Mumbai
6. 2023(6) TMI 1082 - CESTAT Kolkata 7.2021 (45) G.S.T.L. 315 (Tri. - Del.) 8.2024(2) TMI 819 - CESTAT Chennai 9.2021(55) G.S.T.L. 144 (Mad.) 6 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022
ix) M/s Roshan Motors Pvt. Limited v. Commissioner of Central Excise and Customs, CGST, Jaipur10,
x) Rajasthan Diesels v. Commissioner, Central Excise -
Jaipur11,
xi) Toyota Lakozy Auto Pvt. Ltd. v. C.S.T., C.Ex., Mumbai I-ll & IV12, and
xii) CST, Mumbai-l v. Sai Service Station Ltd13.
4. We have gone through the records, and heard the learned counsel for the appellant and Learned Authorized Representative for the Department. The issue involved in the present appeal is about service tax demand from the authorized dealers of the vehicle manufacture, on the incentives / discounts received by the appellant from manufacturer, i.e. TML. The amount of the incentives / discounts received by the appellants during the period from 01.01.2014 to 30.06.2017 amounting to Rs. 1,92,26,093/- has been alleged as taxable under Section 65B(51) of the Finance Act, 1994. However, it has fairly been conceded that the said issue stands already decided in the several decisions of the Tribunal wherein it was concluded that the incentives / discounts received by the appellants / dealers of car manufacturer were not taxable under BAS, as they were the part of a business transaction on a principal-to-principal basis. 10.2022(8) TMI 1254 - CESTAT New Delhi 11.2023(10) TMI810 - CESTAT New Delhi 12.2017 (52) STR 299 (Tri-Mumbai) 132014(35) S.T.R. 625 (Tri-Mumbai) 7 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022
5. The Tribunal in B.M. Auto link vs. Commissioner CGST, Ahmadabad14 held as follows:-
" 4. We have carefully considered the submissions made by both the sides and perused the records. We find the fact is not under dispute as the appellant being a dealer purchase the vehicles from M/s Maruti Suzuki India Ltd and subsequently sell the same to various customers. The transaction between M/s Maruti Suzuki India Ltd and the dealer and subsequently sale transaction between the dealer and the end customers are purely on principle 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."
6. In this connection, reference also needs to be made to the decision of the Tribunal in Rohan Motors Ltd. vs. Commissioner of Central Excise, Dehradun15, wherein the Tribunal observed as follows:
"As per the agreement with MUL, the appellant has received various incentives/ discounts / bonus etc. from MUL from time to time. The income received under these heads was accounted by the appellant in their books of accounts as "miscellaneous income‟. During the course of audit of the books of accounts of the appellant, the Department noticed such Misc. income and took the view that such amounts received by the appellant from MUL are consideration towards promotion and marketing of the vehicles manufactured by MUL and such consideration is liable for payment of Service Tax under the category of Business Auxiliary Service. By taking the above view, show cause notice dated 17.10.2011 was issued covering the period 01.04.2006 to 31.03.2011. Further, show cause notice dated 09.10.2012 was issued covering the period 01.04.2007 to 31.03.2012. The proceedings initiated under the above show cause notices resulted in the issue of two impugned orders, which are under challenge in the present appeals. Since the issue involved is common, these appeals are disposing of with this common order.
14. 2022-VIL-900-CESTAT-AHM-ST
15. 2019(8) TMI 116 8 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022
3. The demands have been raised by Revenue through the two impugned orders covering overlapping periods. Demand has been made under the category of Business Auxiliary Service for the amounts received by the appellant from M/s. MUL. Such amounts have been received towards incentives/discounts in connection with the sale of the vehicles manufactured by MUL. In addition, certain amounts have also been received by the appellant towards Registration/ Number Plate etc. to facilitate the buyers of vehicles. All the above amounts have been charged under BAS. Certain amount of Service Tax has also been demanded under the category of GTA in respect of freight paid by the appellant towards transport of vehicles from their dealership to the customers' premises."
7. The Tribunal placed reliance on an earlier decision of the Tribunal in Toyota Lakozy Auto Pvt. Ltd. v. Commissioner Service Tax, Mumbai -II & V16 and observed as follows:
"4. From a perusal of various case laws relied by the appellant, we note that the discounts/incentives received by the appellant from MUL cannot be made liable for payment of Service Tax under BAS, since the appellant is purchasing the cars from MUL on principal to principal basis and subsequently, reselling the same.
5. Revenue has ordered for payment of Service Tax under various receipts recorded under miscellaneous income. These include loading/unloading charges, Pollution Checkup charges, penalty-cum processing charges etc. It is obvious that these amounts have been received not towards provision of any service on behalf of MUL or anybody else. Consequently, there is no justification for levying Service Tax under BAS.
6. In miscellaneous income, commission amounts received from ICICI have also been included. This commission has been received for provision of furniture to ICICI for facilitation of accommodating representatives in the premises of the appellant for selling insurance policies for cars. Such an activity cannot be considered under BAS as has been held by the Larger Bench in the case of Pagadiya Auto Centre (supra). Consequently, we set aside the demand of Service Tax on such commission received.
7. A portion of the demand also has been raised under the category of GTA. The appellant has paid the freight expenses in connection with transportation of Cars to their customers. However, they have not issued any consignment notes which are necessary to identify the appellant as a goods transport agency. As per the views expressed by the Tribunal in the case of South Eastern Coal Fields Ltd. (supra), in the absence of consignment
16. 2017 (52) STR 299 (Tri.- Mumbai) 9 SERVICE TAX APPEAL NO. 50070 OF 2022 SERVICE TAX APPEAL NO. 50073 OF 2022 notes, the activity of the appellant cannot be classified under GTA service. Consequently, we set aside the demand under GTA service."
8. In view of the settled position of law, we are of the considered view that the amount of incentives and discounts cannot be treated as consideration for any service and therefore no Service Tax is leviable thereon. Having decided the issue on merits in favour of the assessee, it is no longer required to go into the question of limitation raised by the appellant.
10. The impugned order is, therefore, set aside and the appeals are allowed accordingly.
(Dictated and pronounced in the open court) (BINU TAMTA) MEMBER (JUDICIAL) (HEMAMBIKA R. PRIYA) MEMBER (TECHNICAL) Gy.