No Service Tax leviable on Cost of Spares and accessories used for free services during warranty period

Last updated: 06 June 2023
Quick Summary
The CESTAT Chennai has ruled that Service Tax is not applicable on the cost of spare parts and accessories used for providing free services during a vehicle's warranty period. This decision was based on previous Supreme Court rulings and the principle that reimbursable expenses should not be included in taxable value. The ruling clarifies that manufacturers reimbursing dealers for these parts are not liable for Service Tax on those specific costs.

Court :
CESTAT, Chennai

Brief :
The CESTAT, Chennai in M/s. T.A.F.E Access Ltd. v. Commissioner of GST & Central Excise [Service Tax Appeal No. 526 of 2012 dated May 26, 2023] set aside the order demanding Service Tax on cost of the spares/materials used for providing the free services provided during the warranty period. Held that, assessee is not liable to pay Service Tax on the cost of spares and accessories reimbursed by the manufacturer.

Citation :
Service Tax Appeal No. 526 of 2012 dated May 26, 2023

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