Whether free service provided by authorized service station is an input service for automobile manufacturer?

PJ/CASE LAW/2015-16/2889

Case:-TRICITY AUTOS VERSUS COMMISSIONER OF C. EX. & S.T., CHANDIGARH-II

Citation- 2015 (39) S.T.R. 322 (Tri. - Del.)

Issue:- Whether free service provided by authorized service station is an input service for automobile manufacturer?

Brief Facts:- The appellant is in appeal against the impugned order wherein Cenvat credit of service tax paid on the free services provided by the service provider on behalf of the appellant has been denied on the premise that the appellant is not providing any service or not receiving any service at all. The brief facts of the case are that the appellant is an authorized dealer of Maruti Suzuki Ltd. As per the sale policy of the vehicles, three free services are to be provided by the dealer of the vehicle. In the case, the appellant (themselves) are providing free service to the customer on these three free service coupons, there is no dispute. In some cases, the buyer of the vehicle availed the services of authorized service station of Maruti Suzuki Ltd. on behalf of the appellant and the service provider (the authorized service station) issues the invoice on the appellant being an authorized dealer provides the free services to buyer and the appellant availed Cenvat credit of service tax paid to the authorized service station.

Appellants Contention:- The ld. Counsel for the appellant submits that the authorized service station is providing free service to the buyer of the vehicle on behalf of the appellant. As appellant is a registered dealer who sold the vehicle to the buyer. Therefore, invoice is raised in the name of the appellant by the service provider as he has provided services on behalf of the appellant. Therefore, the appellant is the service receiver and consequently service tax paid by the appellant is entitled to the Cenvat credit.

Respondents Contention:-On the other hand ld. AR opposed the contention of the ld. Counsel and submits that in this case the appellant has not provided any service at all and moreover authorized service station has provided the service, therefore, appellant is nowhere in picture. Hence, the appellant is not entitled to take Cenvat credit. Revenue is of the view that the appellant neither received the service nor provided any service, therefore, not liable to take Cenvat credit on the basis of said invoice. Therefore, the proceedings were initiated, demand was correctly confirmed along with interest and penalties.

Reasoning of Judgement:-Heard the parties and considered the submissions. In this case, the authorized service station has provided service to the buyer of the vehicle to whom the vehicle was sold by the appellant and as per the sale policy, the appellant is required to provide three free services to the buyer of vehicle. When the buyer of the vehicle has availed the service of authorized service station without any charges. In that case the authorized service station is providing service on behalf of the appellant and appellant is required to pay the cost of service along with service tax to the authorized service station who has provided service on behalf of the appellant to the owner of the vehicle. Therefore, the service provided by authorized service station has become input service for the appellant and appellant is entitled to take Cenvat credit. In these terms, the tribunal hold that appellant has correctly taken the Cenvat credit. Consequently, the impugned order is set aside. Appeal is allowed with consequential relief.

Decision:-Appeal allowed.

Comment:- The crux of the case is that free services provided by the authorised service station to the buyers of the vehicles on behalf of automobile manufacturer is eligible as input service for the automobile manufacturer.

Prepared By:- Neelam Jain

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PJ/CASE LAW/2015-16/2889

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