The Ahmedabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) in the case B M Autolink Versus C.C.E.-Kutch (Gandhidham) observed and has held that the amount received as an incentive or at a discount by the dealer from the manufacturer of vehicle is not being liable for the service tax.
The two-member bench comprising of Judicial Member, Ramesh Nair and the Technical Member, Raju in the case observed and has held that a dealer purchased the vehicles from Maruti Suzuki India Ltd. and subsequently the same has been sold to the various customers. It was stated that the transaction between the dealer and the Maruti Suzuki India Ltd. And the subsequent sale transaction occurring between the dealer and the customer is purely on the basis of principal-to-principal.
In the present case, the main issue raised was whether the discount given to the appellant by the Maruti Suzuki India Ltd. For the sale of vehicles has to be considered as the service charges imposed towards business auxiliaries and the same is liable for service tax.
The assessee/appellant being the dealers in the case who had purchased the vehicles from Maruti Suzuki India Ltd. and subsequently the same is being sold to the various customers. The transaction occurred between the dealer and the Maruti Suzuki India Ltd. and the subsequent transaction of sale between the dealer and the customer are purely on a basis of principal-to-principal. Therefore, the said discount is nothing but a discount in the value of sale of the vehicle which are sold throughout the year.
Accordingly, the appeal was allowed by the CESTAT and the court held that no service tax was payable on the discount received by the appellant.