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Clarification Regarding Service Tax on Authorised Service Station
Central
Excise Circular No. 699 dated 5th March 2003
I
am directed to say that some doubts have been raised as to:
i)
whether the service provided by an Authorised Service Station related to
the motor vehicles other than those for which they do possess authorization from
the manufacturer, are liable to service tax or not.
ii)
whether the cost of lubricants/ paints provided during the course of
providing any taxable service by an Authorised Service Station would form part
of value of taxable service for the purpose of levy of service tax.
iii)
whether any service provided to customer at the time of purchase of new
vehicle is liable to service tax.
1.
It is clarified that per section 65(8) of Finance Act, 1994,
�Authorised Service Station� means any service station, or centre,
authorised by any motor vehicle manufacturer, to carry out any service or repair
of any motor car or two wheeled motor vehicle manufactured by such manufacturer.
As per section 65 (90) (zo), the taxable service is any service provided to a
customer, by an authorised service station, in relation to any service or repair
or motorcars or two wheeled motor vehicles, in any manner. Therefore, service
tax is leviable only on such services, which are provided in relation to
motorcars, or two wheeled motor vehicles for which the service station is
authorised. The intention was also to cover only the authorised service and
repair of motorcar and two wheeled motor vehicles.
2.
During the course of providing service, an authorised service station
also replaces engine oil, gear oil and coolants etc. as per the request of the
customer. The price charged by authorised service station for engine oil, gear
oil and coolants is towards sale of these consumables to the customer.
Therefore, the sale of consumable during course of providing service is akin to
sale of parts and accessories and therefore value of such consumables is not
includible in the value of taxable services provided value of such consumables
is shown separately.
However,
there are certain items such as paints used for painting body etc. during the
course of providing service, and form intrinsic part and parcel of service in so
much as that these are not distinctly and separately identifiable from the
services rendered. Therefore, value of such items, which form intrinsic part of
service, is includible in the value of taxable service.
3.
The activity of providing Teflon Coating at the time of sale cannot be
construed as a service or repair provided by an authorised service station even
though the same dealer may also be authorised to carry out after sale services.
The authorised sales dealer and authorised service station are appointed to
perform two distinct functions for the car manufacturer and therefore the
activity performed at the time of sales of vehicle by the dealer is distinct
from the service provided by the authorised service station. Normally,
authorised service station comes into picture only after vehicle comes on road.
Therefore, it is envisaged that any activity of sales dealer at the pre-sale
state or at the time of sale will not come under the purview of service tax.
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