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Indian Service Tax

Authorised Service Stations for Motor Cars and Two Wheelers

Effective Date: 16/07/2001

Authority: Notification No. 4/2001-ST, dt. 9/7/2001 (for full text of Notification see under 'Broadcasting').

Rate of Service Tax: 8% from 14/5/2003 (5% upto 13/5/2003) 10% from 10/9/2004 - Cess 2% of 10% = 0.2. Total ST = 10.2%.

Definition

"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 pt car, light motor vehicle or two wheeled motor vehicle manufactured, by such manufacturer, [Section 65(9)]

Taxable service: Motor Cars and two-wheelers service and repair, in any manner provided by a service station or centre authorised by manufacturer of such motor vehicles.

Value of taxable service: Gross amount charged from the customer towards the cost of parts or accessories, if any, sold to the customer during the course of service or repair of motor cars or two-wheelers shall not be included in the value of this taxable service. However, the reimbursement received by the authorised service stations from manufacturers of such cars or two-wheelers, for carrying out any service of them shall be included in the value of this taxable service.

Exemptions

See Chapter on "General Exemptions"
Specific exemptions
Non-authorised service station
Sale of consumables like engine oil, gear oil, coolants etc.
Teflon coating
Buses, trucks, three wheelers

Person liable to pay: Authorised Service Station.

Scope

Authorised automobile service was brought under the tax net witheffect from 16/7/2001. However, it was restricted only to motorcars and two wheeled motor vehicles. Buses, trucks, maxi cabs etc. were not covered. Provision have been made to widen the scope of authorized automobile service to cover all such vehicles.

Exemption

(Para 2.9.1 of Cir. No. 59/8/2003-ST, dt. 20/6/2003): In case of authorized service stations, maintenance or repair services, commissioning and installation services and photography services it has been provided in the law that the cost of goods and material shall not form part of the value to be subjected to service tax, if evidence (like sale invoice/bill) shows that these goods were sold. Such dispensation has, however, not been provided for other services like commercial coaching and training centers, telecom services. In this regard, a general exemption under Notification No. 12/2003-service Tax, dated 20th June, 2003 has been issued exempting that part of the value of all taxable services from service tax, which represents the cost of goods or material sold by the service provider to the receiver of such services during the course of provision of the taxable services. This exemption would be available only in cases where the sale of such goods is evidenced and the sale value is quantified and shown separately in the invoice. It is also clarified that in case of commercial training and coaching institutes, the exclusion shall apply only to the sale value of standard textbooks, which are priced. Any study material or written text provided by such institute as a part of service which does not satisfy the above criteria will be subjected to service tax.

Head of Account

Sl. Code

SCCD

Minor-head

004400145

Authorized Service Station, service or repair provided by for Motorcar and Two-Wheeled Motor Vehicle

00440180

Sub-head

00440014501

Tax Collection

00440181

116

Sub-head

00440014502

Other Receipts

00440182

113

Sub-head

00440014503

Deduct Refunds

00440183

118

Main text of Departmental Circular/TN

[Ministry's ENo. B.II!I/2000-TRU dt. 9/7/2001 - Annexure IX]

As per Section 65 (8), "authorised service station" means any service station, or center, authorized by automobile manufacturer to carry out any service or repair of any motor car or two wheeled motor vehicle manufactured by such manufacturer. The taxable service, as per Section 65 (72) (zo) is any service provided to a customer by an authorized service station, in relation to any service or repair of motor cars or two wheeled motor vehicles.
Any service or repair provided by an authorized service station in relation to motor cars and two wheeled motor vehicles, will be covered in the ambit of service tax. Examples of taxable services include services provided during warranty period, subsequent services such as routine check of performance of engine and vehicle, engine tuning, engine oil check, gear oil check, wheel alignment, wheel balancing, clutch and brake adjustment wheel rotation cleaning! washing and any repairs undertaken. However cost of parts and accessories supplied during course of repair and servicing of vehicle will not be includible in the taxable value. Such cost should be shown separately in the bill/invoice.
Authorised service station provides free service in respect of new vehicles during the warranty period on behalf of the manufacturer and they are reimbursed for the same by the manufacturer of such vehicle. In this regard a point has been raised as to whether service tax is leviable on the amount reimbursed to them for carrying out free services. It is clarified that though the authorized service stations are providing free service to the customer during the warranty period, they are being reimbursed service charges for the same by the manufacturer of motor vehicles. The definition for value of taxable service specifically provides that the reimbursement received from the manufacturer of motor vehicles for free service rendered to the customer is includible in the taxable value.