Sale of old vehicles, not taxable service, where property passed for price and resale was on purchaser's own account.

Transfer of property in old vehicles for a price, accompanied by delivery of possession and documents, was treated as a completed sale under the Sale of Goods Act. Registration continuing in the original owner's name did not negate the sale, because registration is consequential and not the basis of title in a movable good. Refurbishing carried out after purchase was characterised as value addition for resale on the purchaser's own account, not a service rendered to the seller or buyer. On that basis, the transaction fell outside service tax as business auxiliary service, and the tax demand and penalties could not survive.

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Issues: Whether the activity of taking old vehicles from customers, paying the agreed price, taking delivery with documents, refurbishing the vehicles and reselling them constituted a sale transaction outside the scope of service tax, or provision of business auxiliary service.

Analysis: The decisive test was whether property in the vehicle passed for a price. The record showed that the vehicles were handed over to the appellant after valuation, the agreed price was paid, possession and documents were taken over, and the vehicles were later resold by the appellant on its own account. The fact that registration remained in the original owner's name at that stage did not negate the sale, because registration is only consequential and not the basis of transfer of property in a movable good. Once price is received and property is delivered, the sale is complete under the Sale of Goods Act. The refurbishing and related work done while the vehicles were in the appellant's possession was found to be value addition for resale and not a service rendered to the seller or buyer.

Conclusion: The transaction was held to be a purchase and sale of old vehicles and not a taxable service; the service tax demand and penalties could not survive.

Final Conclusion: The appeal succeeded and the impugned service tax liability was set aside on the footing that the underlying transactions were sales of goods and not business auxiliary services.

Ratio Decidendi: For a movable good, transfer of property for a price completes a sale, and absence of change in registration does not by itself convert the transaction into a service.

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