2019 (10) TMI 497 - AT - Service Tax

Business Auxiliary Service - collection from the customers for obtaining temporary and permanent registration respectively with the RTO - HELD THAT - The appellants are collecting some amounts from their customers / purchasers of the cars from their showroom and using the money for getting the vehicle registered with the RTO. Certainly the appellant is rendering a service to the customers and they are also getting a remuneration. However, on this very count, such revenue generated cannot be visited with service tax unless it falls under one or the other definitions of service tax under the various headings given under Section 65. The activity of the appellant does not come under the BAS insofar as it does not support any business whatsoever of the customer. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Taxability of income received by the appellant under Business Auxiliary Service for obtaining temporary and permanent vehicle registration with the RTO.

Analysis:
The appellants, dealers of cars, collected amounts from customers for vehicle registration with the RTO. The Department claimed the income was taxable under Business Auxiliary Service. A show-cause notice was issued, dropped by the original authority, but reviewed by the Commissioner leading to the appeal. The appellant argued the issue was settled by previous Tribunal decisions. The Department, however, supported the Order-in-Review. The Tribunal found the appellants were providing a service to customers by facilitating vehicle registration but concluded that the revenue generated did not fall under service tax unless it met specific criteria under Section 65. The Tribunal noted that the activity did not support the customer's business and referenced previous cases where similar amounts collected for registration were not taxable under service tax.

The Tribunal specifically referred to the case of Toyota Lakozy Auto Pvt. Ltd., where it was held that charges for vehicle registration with the RTO were not taxable under Business Auxiliary Service. The Tribunal set aside the Service Tax liability for RTO registration fees, citing that assisting customers with RTO registration did not fall under Business Auxiliary Service. The Tribunal also invoked Section 80 of the Finance Act, 1994, to set aside penalties imposed by the adjudicating authority. Consequently, the appeal was allowed, and the stay petition was disposed of on 17/09/2019.