The CESTAT, Ahmedabad in M/s. Jivan Jyot Motors Pvt Ltd. [Service Tax Appeal No. 13811 of 2014-DB dated July 24, 2023] set aside the order passed by the Adjudicating Authority and held that no service tax can be demanded where Value Added Tax (VAT) was paid on sale of goods.
Facts:
M/s. Jivan Jyot Motors Pvt. Ltd. (“the Appellant”) is automobile dealer engaged in the business of purchase and sale of vehicles to the customers.
The Appellant while selling vehicle, charges handling and forwarding charges on invoice and charges VAT @ 12.5% on the total value of the invoice including charges of handling and forwarding.
The Revenue Department was of the view that handling and forwarding charges collected by the Appellant are liable to service tax under the head of Business Auxiliary Service (“BAS”). Thereafter, a Show Cause Notice (“the SCN”) was issued to the Appellant.
The Appellant submitted that SCN is confusing that could not conclude that whether the activity handling and forwarding charges is falling under the category of BAS and also submitted that handling and forwarding charges is part of the total sale value of the goods on which VAT was already paid, therefore any element which is part of the sale on which VAT is paid, service tax cannot be demanded.
Aggrieved by the Impugned order the Appellant filed an appeal before the CESTAT, Ahmedabad.
Issue:
Whether demand of service tax is sustainable on forwarding services, where the whole amount including the forwarding charges were subjected to VAT?
Held:
The CESTAT, Ahmedabad in Service Tax Appeal No. 13811 of 2014-DB held as under:
- Opined that, forwarding charges are nothing but part of the sale value of the vehicle sold by the Appellant to their customer, and sale value consists of various elements and the same cannot be bifurcated.
- Relied upon the judgement of the Hon’ble Supreme Court in the case of CST v. UFO Moviez India Limited [Civil Appeal No. 181 of 2022 dated January 06, 2022] wherein the court held that since VAT has been paid on the sale of goods, the question to demand service tax thereon does not arise.
- Clarified that, 12.5% VAT is to be calculated on the total value i.e., basic price plus forwarding charges and paid to the concerned State authorities.
- Held that, when there is sale of goods and VAT was paid no service tax can be demanded.
- Set aside the Impugned order.
(Author can be reached at info@a2ztaxcorp.com)
DISCLAIMER: The views expressed are strictly of the author and A2Z Taxcorp LLP. The contents of this article are solely for informational purpose and for the reader’s personal non-commercial use. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon. Further, no portion of our article or newsletter should be used for any purpose(s) unless authorized in writing and we reserve a legal right for any infringement on usage of our article or newsletter without prior permission.
___________________________________________________________________________________
📢 FREE Webinar on “Blockchain and Virtual digital asset with overall taxation implications including GST” by CA Riddhi Jain & Adv (CA) Bimal Jain
 |
|
🔖 Hurry UP !! Only few seats are left !! Register Now !! 🔖 A2Z Academy is Organizing a FREE Webinar On: 📢“Blockchain and Virtual digital asset with overall taxation implications including GST” 🗓️ Date: August 04, 2023, Friday ⏰ Time: 8:00 PM to 9:00 PM (IST) 🎤 Speakers: 👨🏻🏫 CA Riddhi Jain 👨🏻🏫 CA (Adv) Bimal Jain Registration Link 🔗: https://zoom.us/webinar/register/WN_Kbvufgm6TyW-avGx6_3mfw Coverage: ✔️ What is the current legal status of virtual digital assets in India? Limited seats available Follow us on our social media for more updates: |