Starline Cars Private Limited vs Service Tax - Ahmedabad on 23 August, 2024
"6. Heard both the sides and perused the case records. We have gone
through the relevant agreements between the appellants and M/s. HTML. The
incentives are in the form of trade discounts to the appellants and hence
cannot be termed as any provision of service rendered by the Appellants to
M/s. HTML. Hence there is no reason to demand service tax on the said
incetive amount. Our view is also based upon the Tribunal judgment in case
of CCE, Raipur v. Ralas Motors in (Appeal No. ST/119/2009-CU(DB), dt. 1-
10-2-15). We therefore hold that the service tax demand on incentives is not
sustainable. As regards PDI charges we find that the pre-delivery inspection
is conducted by the dealer on his own in respect of vehicles purchased from
P a g e | 18
ST/10132/2022-DB & ST/10535/2020-DB
HTML, while handling over the vehicles to their customers. From the show
cause notice it is observed that PDI and post delivery free servicing of
vehicles during the warranty period, is carried out as per agreement with the
manufacturer and the entire cost incurred on the same is born by the dealer.
It is undisputed that the appellant has not received any separate amount
from the manufacturer/customer for the same and the cost is incurred out of
their profit margin earned on trading of the vehicles. As the value of the
same is already included in the value of vehicles sold, no service tax is
leviable on the cost of the PDI Charges. The tribunal in case of Kiran Motors
Co.-2009 (16) STR 74 (Tri. Ahmd.) and in the case of Pillai & Sons Motor Co.-
2009 (14) STR 844 (Tri.-Chennai) has set aside the demands in similar set of
facts. In view of our above findings, we hold that the service tax demand and
penalty against the Appellant are not sustainable. We therefore set aside the
impugned order and allow the appeal."