Ironical is the fact that they have been charging everyone and nobody seems to have paid any heed towards this.....!

Whew! Thats an interesting way to take customers for a ride!
Technically speaking, Bajaj is paying for your service and so the service tax must be charged to Bajaj..

Exactly. Tell them that!

Dude, you can be pretty sure they are way out of line with their billing. There is no question of charging for labor for free servicing. And charging for tax when you have not payed anything for labor has absolutely no basis. And those charges for battery maintenance is rubbish. You should definitely take this up with Bajaj.

As for Poona people paying easily, I have heard a v different story from my Hero Honda ASC. The service manager was saying people fight big time even for paying for oil, consumables and stuff like gaskets, etc. And thats the reason they don't clean the filters, etc (requires new gaskets). Now this of course is absurd... fighting for completely wrong reasons. This is as told by the manager... dont know if its entirely true. But I guess knowing the right reasons takes tech knowledge that most customers do not have... so either way, they get a raw deal, and in a way they themselves are the blame, cus we get what we ask for.

Thats absolute non-sense..

they dont get the money(free service) -> they dont have to pay tax to govt. -> You dont need to pay any tax.

It never happens here in PBK nasik. Nor it happened with me when i used to get my caliber serviced at SB-Road Service station Pune. Something is wrong with their billing software. They are not allowed to charge tax they aren't paying. Point it out to them. The problem is not with BAL in this regard, just the person/company who developed their billing software. Once pointed out, you wouldn't face any further problems. Talk to the manager. If that doesnt work, just call up bajaj toll free and explain the situation. You will get much better service from next time around.

1. Service tax is something which is charged on actual amount received, just in case you bargain with the service fee,

Eg. You get the bill, you bargain, and the service provider takes lesser amount and issues you a receipt for the amount you actually paid.... Service tax is charged on this amount.

In your case, when you didn't pay anything, the service tax is supposed to be nil..

2. As per section 67(1)(iii) of Finance Act 1994, as there has been no consideration, there should be no service tax for it..

At Honda, I just paid for Engine Oil and it's VAT, until free Services lasted..

I believe, it is not about Rs. 8, it is about right and wrong.. And you have the right to use your rights.. If it is merely Rs. 8, ask the service provider to give it to you just like that..

However, probably they themselves are not clear about the fact, and might be actually submitting the collected service taxes (need to be checked from challans). But this Rs. 8 has been wrongly collected, which should be borne by them, in my opinion..

You should better talk to the proprietor of the agency.. However, I also believe, this whole process would cost you more than what you shall actually recover.. Unless this place is nearby, if it had been me, I'd not bother this time.. but, would surely have troubled next time..

So, you have to think before you act...

That's absolutely incorrect. How can they charge tax on free service? You should approach the service center manager and address this problem. If he accepts his mistake and refunds you, then it is well and good, otherwise you can shoot a mail directly to Bajaj complaining about the service center. They would take the necessary actions in this regard. I hope this will solve the problem. If the problem persists, you can approach the Consumer court and file a suit against the service center.

In my last GS service, i did not change the engine oil due to less kms run. My bill amount was zero. So I think it's illegal for them to charge tax on free labour.

Update

I have been constantly following it up with senior Bajaj people regarding the same matter and these words are what Bajaj Auto Ltd. has to say regarding the matter


Service has been rendered by our dealer to customer.
The dealer has to pay service tax to government on value of services provided. (This includes reimbursement given by manufacturer for free services)
The said tax can to be collected from the person who has got the benefit of the service.
Hence dealer is collecting the service tax from customer for the service which has been provided.




So, effectively speaking, Bajaj opted to play safe by pulling itself out of the whole issue. They say, its between the consumer and the dealer....!

Tax can be levied if there is a sale & there is indeed one in this case. What is intriguing is why is Bajaj not reimbursing the tax bit too? If Bajaj is reimbursing only Rs.75 to the dealer then I don't see any foul play in this. Somebody has to pay the tax after all.

Fantastic case study Hopefully the B.Coms & CAs among us read this thread

EDIT: This thread is five star in my book simply for being a fantastic caselet and bringing back the memories of my college days

EDIT: After a quick reading of ICWA study material on Indirect Taxes (Chapter on Service Tax), it is evident that Bajaj is liable to pay the service tax. No way, is the customer responsible for paying service tax in this case as 'reverse charge' won't apply here.

I agree.

Bajaj has to reimburse. What is happening is really two transactions:
a. Customer is raised a bill of Rs X. Service tax is being added on it. X +10%.
b. Now bajaj instead of making it "FREE" service, is refunding Rs. X. So its only a partial refund.

If they have said FREE service, it has to be FREE. This useless strings being attached only ruins their name.

All car companies do it all the time. From my time on teambhp i've never heard of anyone being billed "tax" for free services - from nano right up till BMW/Mercs.

Trust indian companies to behave as "lala" companies!!