No Service Tax on Documentation Services provided by Automobile Dealers: CESTAT [Read Order]

The Delhi bench of the CESTAT, in M/s Marudhara Motors v. CCE, held that the documentation services provided by automobile dealers would not attract service tax as the same was not providing on behalf of the financial institutions or banks.

The appellant, in the instant case, is engaged in the trading activity, i.e, sale of vehicle and spare parts and also provides various taxable services.

The department, for the relevant assessment year, demanded tax from the appellants finding that they received documents processing charges from the buyer of vehicle. According to them, the same would constitute ‘Business Auxiliary Service’.

On appeal, the appellant contended that it provides the document processing service for processing of documents for the customers, who are interested in getting their vehicle funded by the banks/financial institutions. Thus, the relationship between appellant and its customers are purely commercial in nature and there is no involvement of any financial institutions/banks and thus, such service provided by the appellant to its customers should not fall under the purview of ‘business auxiliary service’.

Allowing the above contentions, the bench observed that the appellant is not providing any service to the clients for and on behalf of the financial institutions or banks. “Rather there is no contractual agreement exist between the appellant and the banks/ financial institutions that it should be remunerated for providing services to the clients. Since, for providing documentation service, the appellant claims the charges from its customers, the same should not be considered as business auxiliary service, in as much as, there is no involvement of any third party, on whose behalf, the appellant provides service to its customers. Accordingly, the Service Tax demand confirmed against the appellant under business auxiliary service should not stand for judicial scrutiny.”