PER: D.M. MISRA

These two appeals are filed against Order-in-Appeal No.221 to 222/2013-ST dated 07.10.2013 passed by the Commissioner of Central Excise, Customs & Service Tax (Appeals), Cochin.

2. Briefly stated the facts of the case are that during the course of verification of the records of the appellant, it was noticed that the appellant was providing free service of the Maruti vehicles as per the Dealership Agreement between the appellant and M/s. Maruti Udyog Ltd. (MUL, for short). Alleging that they have not discharged the service tax of the services rendered during warranty period of the Maruti make vehicles sold through their own showroom and also they have not paid service tax on the cost of spares, accessories replaced during the warranty period and extended warranty scheme, show-cause notice was issued to them for recovery of service tax for the period from April 2006 to March 2009 amounting to Rs.4,98,818/- and for the period from April 2009 to September 2010 amounting to Rs.3,70,469/- with interest and imposition of penalties. On adjudication, the demand of Rs.4,98,818/- was confirmed with interest and equivalent penalty and other penalties; reduced the demand of Rs.3,70,469/- to Rs.1,64,220/- and confirmed with interest. He also imposed penalties under Sections 70, 78 but dropped penalty under Section 76 of the Finance Act, 1994. Aggrieved by the said order, the appellant filed appeals before the learned Commissioner(Appeals) who in turn partially rejected their appeals. Hence, the present appeals.

3. At the outset, the learned Chartered Accountant for the appellant has submitted that the value of spare parts is reimbursed by the MUL to the appellant as authorised dealer of Maruti vehicles in Kerala State. The terms and conditions of warranty services are reflected in their agreement enclosed with the appeal paper book. He has submitted that for providing services to the customers of Maruti vehicles, no amount would be charged during warranty period, instead the entire amount would be reimbursed by the MUL for which invoices were raised by the appellant. The amount received from MUL was accounted as warranty income in the books of accounts. He has submitted that the issues are settled in favour of the appellant by various orders of different Benches of CESTAT even by Hon’ble Supreme Court. No service tax can be demanded on the value of spare parts received by the appellant from MUL as it was only a sort of reimbursement of cost incurred by the appellant while servicing the vehicles during the warranty period. Referring to the judgment of Hon’ble Supreme Court in the case of CCE Vs. Tata Motors Ltd. [2019-TIOL-418-SC], he has submitted that warranty income is not taxable when no additional consideration is received but the value of such services is already embedded in the sale price of the goods. In support, he has referred to the following judgments:

i. TAFE Access Ltd., Coimbatore Vs. CGST &CE, Coimbatore [2023(5) TMI 1154-CESTAT - Chennai]

ii. CCE, Mumbai Vs. Sai Service Station Ltd. [2013(30) STR 586 (Tri. Mum.)]

iii. Hero Honda Motors Ltd. Vs. CST, Delhi [2013(30) STR 639 (Tri. Del.)]

iv. ABT Ltd. Vs. CCE, Coimbatore [2018(5) TMI 716]

v. Hundai Motor India (P) Ltd. Vs. CCE, Chennai [2019(6) TMI856 - CESTAT-Chennai]

vi. Maruti Suzuki India Ltd. Vs. CST, Delhi [2024(4) TMI 724 -CESTAT Chandigarh]

4. Learned AR for the Revenue has reiterated the findings of the learned Commissioner(Appeals).

5. Heard both sides and perused the records.

6. We find that in the impugned order, the learned Commissioner(Appeals) has upheld the service tax demand raised on the basis of entries made in their books of accounts on the free services rendered by the appellant to the customers during the warranty period of the vehicles and such service charges are paid by MUL to the appellant. Also, demands were confirmed relating to reimbursement spare parts used in providing service during warranty period. We find that both the issu