Additional Commissioner of Sales Tax, VAT III, Mumbai vs. Sehgal Autoriders Pvt. Ltd., [2011] 43 VST 398 (Bom)

Facts
Dealer engaged in selling motor cycles collected service charges or handling charges from customer for registration of motor cycles under Motor Vehicles Act, 1988. The vat authorities levied vat on such amount which was contested before The Maharashtra Sales Tax Tribunal. The Tribunal held that such charges did not constitute a part of sale price within the meaning of ‘sale price’ defined in section 2 (25) of the MVAT Act, 2002. The Vat Department filed appeal before the Bombay High Court against the decision of the Tribunal setting aside the levy of vat on such handling charges collected by the dealer from the customer at the time of sale of motor cycles.

Held
The High Court held that the transfer of property in the goods in pursuance of the sale contract took place against the payment of price of the goods. Delivery of the goods was effected by the seller to the buyer. The obligation under the law to obtain registration of the motor vehicle was cast upon the buyer. The service of facilitating the registration of the vehicles which was rendered by the selling dealer was to the buyer and in rendering that service, the seller acted as an agent of the buyer. Therefore, the handling charges which were recovered by the respondent could not be regarded as forming part of the consideration paid or payableto the dealer for the sale. Those charges cannot fall within the extended meaning of the expression “ sale price”, since they did not constitute sum charged for anything anything done by the seller in respect of the goods at the time of or before the delivery thereof. The High Court accordingly dismissed the appeal filed by the Department and confirmed the order of the Tribunal.