No Service Tax Leviable on Amount retained by Car Dealer in respect of RTO Registration Fees: CESTAT [Read Order]

The Delhi bench of the CESTAT recently held that the department cannot demand Service Tax on the amount retained by Car dealer in respect of RTO registration fees.

In the instant case, the appellant, M/s Yash Motors are 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. The department demanded service tax from the appellant with a view that the amount as retained by the appellant on account of RTO handling charges is liable to service tax under Business Auxiliary Service.

Before the Tribunal, the appellant claimed that the extra amount retained from the expenditure charges collected by the appellant from the customer for the registration purpose is being charged from the customer to whom no service which falls under the category of Business Auxiliary Service is being provided by the applicant and, therefore, not chargeable to service tax.

The Tribunal relied on a ruling by Mumbai CESTAT wherein it was held that helping the purchases of with the registration with the RTO cannot be considered as an activity under Business Auxiliary Service.

Following the decision, the bench held that the charges received and retained by the applicant from the customers for facilitating RTO registration is not chargeable to service tax under business auxiliary service category.