2025-VIL-1987-CESTAT-DEL-ST
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SERVICE TAX CESTAT Cases

Service Tax - Incentives/Discounts, Dealer-Manufacturer Relationship - Appellant is an authorized dealer of M/s. Maruti Suzuki India Ltd. (MSIL) and provides maintenance and repair services for light motor vehicles/passenger cars. MSIL provided incentives and trade discounts to the appellant on achievement of certain sales targets, such as wholesale target, accessories sales, and spare parts sales - Whether service tax is leviable on the incentives/discounts and reimbursements extended by MSIL to the appellant – HELD - The issue is no longer res integra and squarely covered by the law laid down by the Tribunal. The dealership agreement between the manufacturer (MSIL) and the dealer (the appellant) establishes a principal-to-principal relationship, where the dealer purchases the vehicles from the manufacturer and sells them to the end customers. The incentives and discounts are in the nature of trade discounts and form part of the sale price of the vehicles, having no correlation with the services to be rendered by the appellant. The activity of promoting the sale is with respect to the vehicles owned by the appellant, which is incidentally in the interest of both parties - The onward sale of vehicles involves merely a transfer of property in goods, which is excluded from the definition of "service". Therefore, the incentives and discounts cannot be treated as consideration for any service, and consequently, no service tax is leviable thereon - the impugned order is set aside and the appeal is allowed
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