CESTAT, BANGALORE BENCH

Indus Motor Co.

v.

Commissioner of Central Excise

dr. S.L. Peeran, Judicial Member And T.K. Jayaraman, Technical Member

Final Order Nos. 928 and 929 of 2007

Appeal Nos. ST/93 and 94 of 2007

August 9, 2007

Authorised Service Station

Section 65, read with section 68, of the Finance Act, 1994 - Authorised service station - Period from 16-7-2001 to 31-3-2005 - Assessee, an authorized service station, provided free services for vehicles sold by manufacturer ‘M’ - Service tax was demanded from assessee for said free services rendered by it - Whether when a service was free, unless revenue showed some evidence that assessee got reimbursement in some other guise, it would not be possible to confirm demand - Held, yes - Whether since demand of service tax was based upon assumptions and presumptions, impugned order demanding service tax was to be set aside - Held, yes [Para 6]

>> Facts

The assessee was the authorized service station of ‘M’. It rendered free services for the vehicles sold by ‘M’. The revenue proceeded to demand service tax and education cess from the assessee for said services for the period from 16-7-2001 to 31-3-2005. The demand was confirmed by the adjudicating authority on the ground that cost for the services rendered was actually hidden in the cost of vehicles itself. The Commissioner (Appeals) also upheld the order of the adjudicating authority.

On appeal :

>> Held

The department was not in a position to show any evidence for reimbursement to the assessee for the services rendered. Thus, it was found that the demand of service tax in instant case was based upon assumptions and presumptions. When a service was free, unless the revenue showed some evidence that the assessee got reimbursement in some other guise, it would not be possible to confirm the demand. Therefore, no merit was found in the impugned orders. Hence, the appeal was to be allowed. [Para 6]