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ST - Appellant, car dealer, undertook activity of registration of new cars with RTO - amounts collected from buyer are towards statutory dues - demand of ST on 'excess' collection under 'BSS' not sustainable: CESTAT

By TIOL News Service

MUMBAI, MAY 24, 2013: Legal Corner IconMY Car Pune Pvt. Ltd. is an authorized Maruti Suzuki car dealer in Pune.

Since the motor car is to be registered prior to delivery of the same, they undertook the activity of registration of the car on behalf of the buyers with the RTO authorities. They collected amounts from buyers for this purpose, which are used for payment of the various statutory dues and sometimes they have collected excess amount.

The department is of the view that the amount collected in excess is liable to Service Tax under the category of ‘Business Support Services'. Accordingly, a notice was issued and after due process of law, a demand of Service Tax of Rs.3,27,406/- was confirmed for the period January, 2010 to February, 2011 along with interest thereon and also imposing penalties.

The lower appellate authority too upheld the allegation leveled and hence the appellant ‘My Car' drove in his car to the CESTAT.

After hearing the arguments, the Bench observed -

"3. "Support services of business or commerce" as defined under Section 65(104c) means services provided in relation to business or commerce and includes evaluation of prospective customers, telemarketing, processing of purchase orders and fulfillment services, information and tracking of delivery schedules, managing distribution and logistics, customer relationship management services, accounting and processing of transactions, operational assistance for marketing, formulation of customer service and pricing policies, infrastructural support services and other transaction processing.

3.1 To qualify within this definition, the activity undertaken as described above should be in relation to business or commerce. When a customer purchases a car from dealers and services are rendered in relation thereto, it cannot be said that the services has been rendered in relation to business or commerce. Therefore, we are prima facie of the view that the Service Tax demand under the category of ‘Business Support Services' is not sustainable in law."

Accordingly, the Bench granted waiver from pre-deposit of the adjudged dues and stayed recovery.

Speed money : ST demand of Rs.3.27 lakhs would mean the excess amount was quite a sum - is the buyer seeking any reimbursement?

(See 2013-TIOL-778-CESTAT-MUM)


 RECENT DISCUSSION(S) POST YOUR COMMENTS
   
 
Sub: rto income

great order greater reporting. thanks. dept ko ye samajhna hoga ki profit and loss account ki har income par service tax nahi banta, jab tak activity service na ho. 119 me se kisi bhi category me ye activity cover nahi hoti. agar statutory dues payment lke samay kuch excess retain kar bho liya to uspar banda income tax dega na.

negative list aane ke baad bhi service ki nai definition me bhi ye cover nahi hoga kyonki ye car yani goods ke title transfer se related transaction hai ewam yah kar ki sale ke liye hi liya ja raha hai isliye exclusions men cover ho jayega. badhai

Posted by Navin Khandelwal
 

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