Author: Khushi J Prajapati
The Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, held that the logistic and handling services provided by car traders do not attract service tax.
Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) ruled in favor of M/s Surjeet Auto Private Limited, stating that service tax did not apply to logistic and handling services provided by the car dealer.
The tribunal found that these services were integral to the sale of vehicles and fell within the ambit of sales price subject to VAT rather than service tax.
CESTAT looked at Section 65 (19) of the Finance Act, 1994 defining “Business Auxiliary Services” and concluded that the activities did not fall under this category.
The Tribunal rejected the demand for service tax and penalties associated with it, insisting that they should have been governed by VAT laws.
FACTS
M/s Surjeet Auto Private Limited, an authorized dealer of Hyundai cars, is engaged in the sale of vehicles and associated services. The company charged ‘logistic charges’ to customers, which comprised various vehicle preparation services such as loading, unloading, cleaning, and maintenance of cars before handing over the same to their respective buyers.
The Central Excise authorities contended that these charges were liable for service tax under the “Business Auxiliary Services” Section 65 (19) of the Finance Act, 1994. The authorities assessed a service tax liability of ₹4,89,964.
The appellant had already made a payment of ₹3,45,502 against it. The balance was demanded through a show cause notice along with a penalty amounting to ₹4,89,964 under Section 78 of the Finance Act, 1994. Challenging this demand the appellant argued that these charges are part and parcel of the sale transaction and hence should attract VAT and not service tax.
Case Details
Tribunal: Customs, Excise & Service Tax Appellate Tribunal (CESTAT), New Delhi, Principal Bench
Service Tax Appeal Number: 50984 Of 2018
Date of Decision: 02.08.2024
Final Order Number: 56217/2024
Appellant: Surjeet Auto Private Limited
Respondent: Commissioner of Central Goods, Service, Central Excise
Judges – Ms. Binu Tamta, Member (Judicial) and Ms. Hemambika R. Priya, Member (Technical)
