Order Date – 05 June 2023

Parties: M/s. S.K. Cars India (P) Ltd. Vs Commissioner of GST & Central Excise

Facts – 

• The Appellant, M/s. S.K. Cars India (P) Ltd., is engaged in the business as dealer of Four Wheeler Motor cars of M/s. Maruti Udyog Ltd. and is registered as a service provider of Servicing of Motor Vehicles, Business Auxiliary Service and Goods Transport Agency Service.
• A Show Cause Notice was issued proposing to demand Services Tax on the incentives received by them as well as the reimbursement of the advertisement charges from M/s. Maruti Udyog Ltd, and M/s. Sundaram Finance Ltd, for various promotional activities.
• The demand was confirmed along with interest and penalty.

Issue – 

• Whether the demand on incentives and reimbursement of the advertisement charges are in order?

Order – 

• The Tribunal observed that the Tribunal in the case of BM Autolink Vs Commissioner of Central Excise, Kutch has taken similar view and set aside the demand of service tax on the incentives received for sale of cars. It was observed that “on the basis of yearly performance of sale grants the discount to the dealer, this discount is nothing but a discount in the sale of value of the vehicle and 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.”
• Hence it was held that the incentives received by the appellant cannot be subject to levy of service tax under the category of Business Auxiliary Services.
• As per the annexure to the Show Cause Notice is seen that these are nothing but reimbursement of expense for advertisement. The Honourable Supreme Court in the case of Intercontinental Technocrats Ltd. has held that the reimbursable expenses cannot be subject to levy of service tax.
• Thus, demand cannot sustain. The appeal is allowed.