:- Whether service tax paid on transportation of vechile by authorized dealer-cum-service station is a input service for him?

PJ/Case Laws/2012-13/1210

Case:- ASSTT COMMISSIONER OF CUSTOMS, CENTRAL EXCISE & SERVICE TAX,
VISAKHAPATNAMVs M/s SREE SIVA SANKAR AUTOMOBILES

Citation: - 2012-TIOL-1094-CESTAT-BANG
Issue:- Whetherservice tax paid on transportation of vechile by authorized dealer-cum-service station is a input service for him?

Brief fact:- The Respondents are the authorized dealers of Hero Honda Motorcycles and accessories and are also having authorized service stations. In respect of activities as authorized service station, 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 the factory to the 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.

Thereafter the department filed appeal against the order of the Commissioner (Appeals) No.11/2010 (V-I) ST dated 26.2.2010.

Reasoning of Judgment: 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 a 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 learned Superintendent (AR) is reproduced below:

3. The activity of providing Teflon Coating at the time of sale cannot be construed as a service or repair provided by an authorized service station even though the same dealer may also be authorized to carry out after sale services. The authorized sales dealer and authorized service station are appointed to perform two distinct functions for the car manufacturer and therefore the activity performed at the time of sales of vehicle by the dealer is distinct from the service provided by the authorized service station. Normally, authorized 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-sale stage or at the time of sale will not come under the purview of service tax.

Tribunals did not found 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.

Therefore appeal is allowed and the order of the Commissioner (Appeals) is set aside and the order of the original authority is restored.

Decision:- Revenue Appeal Allowed.

Comment:- The tribunal has examined the issue thoroughly and held that the service tax paid on transportation of vehicle is not input service for authorized service station. This is due to the fact that the vehicle transported are traded by them and is not used for providing service. The credit is available on those input services which are used for providing output service.

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PJ/Case Laws/2012-13/1210

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