By TIOL News Service

MUMBAI, JAN 18, 2016: THE appellant is an authorized dealer of Maruti Cars and from customers who purchase cars they are also receiving amounts towards RTO registration charges, Smart Card Fees, Vehicle Registration Fees and other extra charges. It is the case of the Revenue that these ‘extra charges' collected are taxable under the category of Business Support Services except for actual RTO registration charges.

The Commissioner (A) while upholding the tax demand has also concluded that – 'the appellant by extending these services rendered to build a strong supportive relationship with people and more so with the customers get covered under the category of Business Support Services and covered directly in relation to their main business of sales of cars''.

Aggrieved, the car dealer is before the CESTAT.

Business Support Services - section 65(104c) of the Finance Act, 1994 reads:

"(104c) "support services of business or commerce" 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 or administrative assistance in any manner], formulation of customer service and pricing policies, infrastructural support services and other transaction processing.

Explanation . - For the purposes of this clause, the expression "infrastructural support services" includes providing office along with office utilities, lounge, reception with competent personnel to handle messages, secretarial services, internet and telecom facilities, pantry and security;"

The Bench, at the outset, opined that it did not agree with the findings recorded by the lower authorities. 

After referring to the definition of BSS, the CESTAT observed -

"…It can be seen from the above reproduced definition that the said definition covers services which are rendered as indicated therein. In the case in hand, the amount collected as extra charges is not for any of the services which are enumerated in the said definition. The first appellate authority has stated that appellant is a rendering customer relationship services which in our view is incorrect as the definition talks about an entity rendering customer relationship management services and not the customer relationship by the appellant himself. In our view the definition of ‘Business Support Services' will not cover the services rendered by the appellant even in the residual category of "other transaction processing”.

Holding that the order is not sustainable, the same was set aside and the appeal was allowed with consequential relief.

(See 2016-TIOL-190-CESTAT-MUM)