SAI SERVICE STATION LTD., CHERANELLUR ROAD, EDAPPALLY P.O., KOCHI Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) The question concerns the "sale" of used cars. The Motor Vehicles Act, 1988, does not directly deal with the sale of a motor vehicle, a movable property; but the Sale of Goods Act, 1930, does. The Motor Vehicles Act, though, deals with the procedure post-sale. Here, a motor vehicle dealer is dealing in used cars. Is its transaction a sale in the conventional sense attracting the sales tax, or a service-as an intermediary, agent, or broker-to the true owner attracting service tax? The question is simple, but the answer is not.

(2.) The respondent-Sai Service Station Ltd., ("Sai") is an authorised dealer for the cars made by M/s. Maruti Udyog Limited. Besides selling the new cars, Sai services and repairs the motor vehicles it sells. To this extent its business is conventional. But it also sells or deals in used or pre-owned cars through its "True Value Division"-the very expression "sale" being contested. It holds Service Tax Registration Certificate under the categories of the authorised service centre, Input-service distributor, and Business Auxiliary Services provider.

(3.) Taking a view that the activity undertaken by Sai's True Value Division-exchange of old cars for new ones-amounts to business auxiliary service and the difference between the sale price for the old cars and the purchased price of the new ones has to be treated as remuneration for the service rendered by Sai, the appellant-Department issued a show cause notice on 10.04.2012 why the Department should collect from Sai service tax of Rs. 53,76,644/- with interest and penalty for the period from 01.10.2006 to 30.09.2011.