No service tax payable on handling charges for the spare parts when spare parts itself are not includible in the taxable value of service.

PJ/Case Law/2013-14/1660

Case:-C.C.E., MUMBAI Vs SEVA AUTOMOTIVE PVT LTD

Citation:- 2013-TIOL-1023-CESTAT-MUM

Brief Facts:-The respondent, M/s Seva Automotive Pvt. Ltd., Nagpur is registered as an ‘authorised service station' and rendering services as such and discharging Service Tax liability on their activities. While rendering the said services, the recipient also sells spare parts of automobiles. The spare parts were received from the manufacturers and the respondent charges handling charges for handling of these spare parts at their service stations. The Revenue was of the view that the handling charges for the spare parts should form part of the taxable value of the service rendered by the appellants. Accordingly, a notice was issued demanding service tax of for the period July 2001 to February 2004. The said demand was confirmed vide order. Against this, the respondent preferred an appeal before the lower appellate authority. The lower appellate authority noted that in the case of authorized service stations, the cost of the spare parts are not to be included in the value of the services rendered as per section 67 of the Finance Act, 1994, as it stood at the relevant time, since the cost of spare parts itself is not includible; therefore, handling charges incurred in respect of such spare parts also will not form part of the taxable value of the service rendered. Accordingly, he dropped the demand. The Revenue is aggrieved of the same and is before Tribunal.

Appellant’s Contention:- The Revenue reiterates the grounds urged in the show-cause notice that handling charges incurred for the spare parts should form part of the taxable value of the services rendered.

Respondent’s Contention:-The Respondent reiterates the conclusions drawn in the appellate authorities' order.

Reasoning of judgment:-The Tribunal has carefully considered the submissions made by both the sides and finds that Section 67 as stood in the relevant time provided for exclusion of cost of spare parts sold while rendering repair services of automobiles. If that be so, the cost of handling of such spare parts incurred by the respondent would also not form part of the taxable value of the service rendered. Therefore, the Tribunal do not find any infirmity in the reasoning adopted by the lower appellate authority. Accordingly, the Tribunal dismissed the appeal filed by the Revenue as devoid of merits.

Decision:- Appeal dismissed.

Comment:- It is clear from this case is that since the cost of spare parts itself is not includible in the assessable value during the relevant time, handling charges incurred in respect of such spare parts also will not form part of the taxable value of the service rendered.

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PJ/Case Law/2013-14/1660

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