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PJ/Case law/2014-15/2270

Whether service tax credit on outward freight available to assessee acting in dual roles as dealer and authorised station?

Case:-  ASSTT. C.EX. & S.T., VISAKHAPATNAM vs. SREE SIVA SANKAR AUTOMBILES

Citation:- 2014(34) S.T.R 797 (Tri.- Bang.)

Brief facts:- The relevant facts in brief are that the respondents are the authorised dealers of Hero Honda Motorcycles and accessories and are also having authorized service station. In respect of activities as authorized service station service, the respondents are paying service tax as authorized service station service. The dispute relates to credit taken by the respondent in respect of service tax paid on the freight amount involved in transporting the motor vehicles from factory to dealer’s premises. Original authority disallowed the credit amounting to Rs. 2,63,099 /- for the period from April 2007 to March 2008 along with interest and imposed penalty under section 76 of the finance act. On an appeal by the party, the Commissioner (appeals) set aside the order of the original authority. Hence, the revenue is in appeal before the Tribunal.  

Appellant’s contention:-The learned Superintendent(AR) referring to Board’s Circular No. 699/15/2003-CX., dated 5-3-2003 submits that the activities of the respondent as a dealer of vehicle are different from the activities of the respondent as authorized service station. The GTA services utilized for transporting the vehicle to the dealer’s premises cannot be treated as input service in respect of the activities undertaken by them as authorized service station.

Reasoning of judgement:- The tribunal observed that the respondents are undisputedly having dual roles, one as dealer of the motor vehicle and the other as the authorized service station. The GTA services utilized for the purpose of transport of the vehicle to the dealer’s premises relate to their activities as dealer. This GTA services cannot be treated as input services in respect of activities undertaken by the respondent as authorized service station. The relevant portion of the Board’s clarification relied upon by the learned Superintendent (AR) is reproduced below:
“The activity of providing Teflon coating at the time of sale cannot be constructed as a service or repair provided to carry out after sale services. The authorised sales dealer and authorised service station are appointed to perform two distinct functions for the car manufacturer and therefore the activity performed at the times of sales of vehicle by the dealer is distinct from the service provided by the authorised service station. Normally, authorised service station comes into picture only after vehicle comes on road. Therefore, it is envisaged appears that any activity of sales dealer at the pre- stage or at the time of sale will not come under the purview of service tax”
The tribunal did not find any valid reason for the commissioner (appeals) to have deviated from view expressed in the clarification of the Board. As already noted, the GTA services utilized for transport of the motor vehicles cannot be treated as input services for the activities of the respondent relating to the authorized service station. Therefore Tribunal found merits in the appeal filed by the department. The appeal is allowed and the order of the Commissioner (appeals) is set aside and the order of the original authority is restored.

Decision:- Appeal allowed.

Comment:- The essence of this case is that as per the Circular No. 699/15/2003-CX., dated 5-3-2003 and Rule 3 of the Cenvat Credit Rules, 2004, if the GTA services are being utilized for the purpose of transport of the vehicle to the dealer’s premises then the credit of service tax would not be admissible to the assessee as provider of authorised station service. The reason for the same being that the transportation services relate to their activities as dealer and so such GTA services cannot be treated as input services in respect of activities undertaken by them as authorized service station.

Prepared by: Lovina Surana

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PRADEEP JAIN, F.C.A.

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