M/S. Frostees Exports (India) Pvt. Ltd. vs. DCCT, Corporate Division, Kolkata and Others, [2012] 50 VST 392

Facts
The petitioner a private limited company
engaged in the business of selling motor vehicles sold motor vehicles
and collected, over and above price of motor vehicles, cost of
registration, insurance premium and road tax payable by the buyer under
the Motor Vehicles Act, 1989. The Company claimed collection of such sum
as not forming part of sale price being post sale services, whereas the
department treated it as forming part of sale price and levied tax
thereon. The Company filed appeal before the West Bengal Taxation
Tribunal against the order of appeal confirming the levy of tax by the
assessing authority on such sum.

Held
Under the Motor
Vehicles Act, delivery to the owner is a pre-condition of a sale and
sale was complete with the issue of sale certificate. Under the Act, it
is the liability of the owner to get it insured before registration.
Therefore, the registration of the motor vehicle is a post-delivery
event. The insurance premium is payable by the owner before
registration. Likewise, the owner of motor vehicles has to pay road tax.
So therefore, there is no scope for debate that the payment of road tax
is a post delivery event and hence it should not form part of sale
price.

Neither of the sides asserted whether after the sale the
physical possession of the goods was retained by the selling dealer.
Even if retained, it was retained by him as bailee for the purpose of
service of registration, insurance and payment of road tax. This
possession is a possession on behalf of the person to whom the goods
were sold. Any amount spent in respect of those retained goods during
such possession was spent on behalf of the buyer and as such it would
not form part of sale price as defined in section 2(31) of the Act.

The
Tribunal further held that it is settled law that, in the composite
transactions also, the value of service cannot be included in the sale
and taxing the service rendered by the Dealer after sale of the goods is
beyond the scope of Entry 54 of List II, Schedule VII read with Article
366(29A) of the Constitution of India. The Tribunal allowed the appeal
and held that the collection of sum by way of road tax, insurance
premium and registration cost not to be included in sale price of the
goods sold and not liable for tax.