2025 (9) TMI 678

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....on of Maruti Suzuki cars and are registered as service provider. During the audit by the department, it was noticed that they were also undertaking 'buying and selling of used cars' after refurbishment and replacement of spares in the said cars. The appellant did not pay service tax on such service of refurbishment of old cars. Hence Show Cause Notice dated 18.11.2009 was issued to the appellant demanding service tax to the tune of Rs.4,62,466/- for the period from 2005 - 06 to June 2009. After due process of law, the Ld. Adjudicating Authority confirmed an amount of Rs.2,21,273/- pertaining to refurbishment / restoration along with interest and imposed equal penalty under sec. 78 of the Finance Act, 1994. In appeal, the Ld. Commissioner (A....

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....on acquisition by the appellant. However, this position is incorrect. The Ld. Counsel stated that upon payment of consideration and delivery, title to the vehicle passes from the prior owner to the appellant, in accordance with the Sale of Goods Act, 1930. The procedures under the Motor Vehicles Act, 1988 regarding mutation in RTO records are limited in scope and pertain primarily to third-party liability. This issue has been addressed by the Hon'ble CESTAT in Sai Service Station Ltd. v. CCE 2015 (37) STR 516 (Tri.-Bang.), wherein it was held that transfer of property occurs upon payment and delivery, with the mutation of registration being irrelevant for assessing Service Tax liability. Moreover, the Tribunal further ruled that no Service ....

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.... relied upon by the learned counsel is applicable to the facts of this case. Hon'ble High Court of Kerala in para-15 has made the following observations which in our opinion is relevant and therefore is reproduced below : "15. It is quite surprising and shocking to note that the lower Court had noticed that Ext. B5 cannot be accepted because it is not registered and sufficiently stamped as required under the Registration Act and Transfer of Property Act. It appears that the lower Court has omitted to notice that the transaction involved in this case is the sale of vehicle which is a movable article and it is governed by the provisions of the Sale of Goods Act. Section 4 of the Sale of Goods Act read as follows : 4. Sale and agreement to....

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....e property has been delivered or not. In this case, as observed by the Commissioner himself in paragraph 55, the property is delivered and the price has been received by the seller of the old car. Therefore, the first transaction cannot be considered as the one which is not a sale. There is no doubt as to the second transaction whether it is a sale or not. Once the first transaction is considered as sale, it means that the vehicle has been purchased by the appellant who subsequently sold them. Therefore it becomes totally a transaction of purchase and sale of old vehicles. It is not the case of the Revenue that refurbishing of the vehicle, repair and other activities undertaken by the appellants when the vehicle was in their possession is a....