Service Tax not leviable on discounts offered by car manufacturers to their dealers for onward transmission to corporate customers

Last updated: 14 September 2021

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Quick Summary

The CESTAT Mumbai ruled that discounts offered by car manufacturers to their dealers, which are then passed on to corporate customers, are not subject to service tax. The tribunal found that the relationship between the manufacturer and dealer is principal-to-principal, and these discounts are part of normal sales transactions, not 'business auxiliary services'. Consequently, the demand for service tax, interest, and penalties was set aside.

Court :
CESTAT, Mumbai

Brief :
In AUTOBAHN ENTERPRISES PVT. LTD. v. COMMISIONER OF SERVICE TAX, [FINAL ORDER NO: A /8673 /2021 dated September 07, 2021], Autobahn Enterprises Pvt. Ltd. ("the Appellant")was an authorized dealer of M/s Skoda Auto India Pvt Ltd. and in accordance with their agreements, the Appellant was allowed to offer discounts on the sale of vehicles to their corporate customers to be reimbursed to them and had facilitated banks and financial companies, as well as insurance companies, to service loan and insurance requirements of customers from their premises.

Citation :
FINAL ORDER NO: A /8673 /2021 dated September 07, 2021

Daily Limit Reached