Case Details: Honda Motorcycle and Scooter India Pvt. Ltd. Versus Commissioner of Service Tax, Alwar (2025) 29 Centax 383 (Tri.-Del)
Judiciary and Counsel Details
- Ms Binu Tamta, Member (J) & Shri P.V. Subba Rao, Member (T)
- Shri B.L. Narsimhan, Shivam Bansal & Dhruv Anand, Advs., for the Appellant.
- Ms Jaya Kumari, Authorised Representative, for the Respondent.
Facts of the Case
The petitioner, a manufacturer of motorcycles and scooters, sold its products to dealers across the country. In connection with these sales, the petitioner arranged transportation and insurance of the goods up to the dealers’ premises. For this purpose, the petitioner recovered freight and insurance charges from the dealers by applying a fixed percentage on the sale price of the goods. The actual expenses incurred by the petitioner on transportation and insurance were lower than the amounts recovered from the dealers. The excess amount collected over and above the actual expenses was retained by the petitioner. The Department treated this differential amount as ‘profit’ and classified it as taxable under the category of Business Auxiliary Service under the Finance Act, 1994. A demand for service tax was issued on the alleged service component embedded in the excess recovered amount. The petitioner challenged the demand before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT).
CESTAT Held
The Hon’ble CESTAT held that the excess freight and insurance amounts recovered from dealers were not liable to service tax. It found that these recoveries were not consideration for any independent service but formed part of the transaction value under Section 4 of the Central Excise Act, 1944, on which excise duty had already been paid. The Tribunal observed that the transportation and insurance were arranged solely to facilitate delivery of excisable goods and that no service provider–recipient relationship existed. It concluded that levying service tax on the same component would amount to double taxation. Accordingly, Service Tax demand was set aside.
List of Cases Cited
- Aia Engineering Ltd. v. Commissioner — 2010 (19) S.T.R. 257 (Tribunal) — Referred [Para 7]
- Allengers Medical Systems Ltd. v. Commissioner — 2009 (14) S.T.R. 235 (Tribunal) — Referred [Para 7]
- Commissioner v. Novapan Industries Ltd. — 2007 (209) E.L.T. 161 (S.C.) — Relied on [Para 11]
- Commissioner v. UFO Moviez India Ltd. — 2022 (61) G.S.T.L. 4 (S.C.) — Referred [Para 7]
- Gokulanand Texturisers Pvt. Ltd. v. Commissioner — Final Order Nos. 10857-10860/2024, dated 9-4-2024 by CESTAT, Ahmedabad — Referred [Para 4]
- Jivan Jyot Motors Pvt. Ltd. v. Commissioner — (2023) 11 Centax 119 (Tri. – Ahmd.) — Referred [Para 7]
- K.R. Packaging v. Commissioner — 2017 (51) S.T.R. 438 (Tribunal) — Referred [Para 7]
- Niraj Prasad v. Commissioner — 2020 (38) G.S.T.L. 78 (Tribunal) — Relied on [Para 11]
- Popular Carbonic Pvt. Ltd. v. Commissioner — Final Order Nos. 41717-41731/2021, dated 4-8-2021 by CESTAT, Chennai — Relied on [Para 11]
- Pushpak Steel Industries Pvt. Ltd. v. Commissioner — 2019 (20) G.S.T.L. 88 (Tribunal) — Referred [Para 4]
- SRF Ltd. v. Commissioner — Final Order No. 51744/2021, dated 11-8-2021 by CESTAT, New Delhi — Relied on [Para 11]
- Tiger Logistics (India) Ltd. v. Commissioner — 2022 (63) G.S.T.L. 337 (Tribunal) — Referred [Para 6]
