By TIOL News Service

NEW DELHI, AUG 10, 2018: THE assessee is selling vehicles of M/s Tata Motors to various customers and they are getting such vehicles registered with the local RTO on behalf of customers and to cover other minor expenditures relating to such activity, the assessee is collecting some amounts from the customers. The amount charged for such facilitation is in lump-sum manner and no headwise expenditure is being shown by them. The fact of the matter is that after bearing the expenditure for registration of vehicles with the RTO and other minor expenses relating to the registration, some amount gets saved with the assessee and this amount is duly accounted for in their financial accounts.

The Department viewed that the amount retained by assessee on account of RTO handling charges is liable to service tax under BAS.

The Commissioner (A) has upheld the demand of service tax alongwith interest and equal amount of penalty.

The basic argument of assessee is that the extra amount retained from the expenditure charges collected by them from the customer for registration purpose is being charged from the customer to whom no service, which falls under the category of BAS is being provided by assessee, and, therefore, not chargeable to service tax.

Matter is no more res-integra as in case of Arpanna Automotive Pvt. Ltd. 2016-TIOL-1550-CESTAT-MUM Tribunal has held that helping the purchaser 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.

Following the decision of Tribunal in Arpanna Automotive Pvt. Ltd. (supra), the impugned order is set aside and the appeal is allowed.

(See 2018-TIOL-2473-CESTAT-DEL)