2018 (5) TMI 1679 - AT - Service Tax

Business Auxiliary Services - the amount as retained by the appellant on account of RTO handling charges - Held that - The matter is no more res-integra as in the case of Arpanna Automotive Pvt. Ltd. vs. CC & CE 2016 (3) TMI 308 - CESTAT MUMBAI has held that helping the purchases of with the registration with the RTO cannot be considered as an activity under Business Auxiliary Service and, therefore, service tax cannot be demanded on the amount retained by the appellant in respect of RTO registration fee. The charges received and retained by the applicant from the customers for facilitating RTO registration is not chargeable to service tax under business auxiliary service - appeal allowed - Decided in favor of appellant.

Summary

Issues:
Whether the amount retained by the appellant on account of RTO handling charges is liable to service tax under Business Auxiliary Service?

Analysis:
The appellant sells vehicles to customers and facilitates vehicle registration with the local RTO on behalf of customers, collecting amounts for such facilitation. The Department contends that the amount retained by the appellant for RTO handling charges is subject to service tax under Business Auxiliary Service. The Commissioner (Appeals) upheld the demand for service tax, interest, and penalty. The appellant argues that the extra amount retained from customer charges for registration, where no service under Business Auxiliary Service is provided, should not be taxable.

In a similar case, the Tribunal ruled that assisting customers with RTO registration does not fall under Business Auxiliary Service, hence not subject to service tax. The definition of Business Auxiliary Service pre and post 10-9-2004 was examined, concluding that the appellant's activities do not align with the services covered under Business Auxiliary Service. The Tribunal emphasized that helping customers with RTO registration cannot be categorized as Business Auxiliary Service, citing precedents where similar charges were deemed non-taxable.

Given the similarity of the present case to the precedent, the Tribunal held that charges retained by the appellant for facilitating RTO registration are not taxable under the Business Auxiliary Service category. Consequently, the order-in-appeal was set aside, and the appeal was allowed. Penalties were also set aside invoking Section 80 of the Finance Act, 1994 due to conflicting decisions on the taxability of amounts received from financial institutions.