Dear All,
A company is having the dealership of TAFE TRACTORS. It is in the business of trading and servicing the sold tractors of TAFE company.The question is whether company is liable to service tax..? Whether servicing of tractors used for agricultural purpose is covered in negative list.? whether company should apply for s.tax registration..?
Thanks in advane
Rahul,
It appears that the company is an authorized automobile dealer. Accordingly, service tax shall not be leviable on selling of tractors since the same construes to be trading of goods. Transfer of title in goods is excluded from the definition of service. Trading in goods involves a transfer of title in goods, hence exempted. Moreover, trading of goods is included in the Negative list, therefore trading tractors as a dealer shall not be taxable.
However, the activity of servicing sold tractors shall be taxable. As per negative list based service tax regime, every service is taxable if its not covered by negative list or aby exemption notification. Since servicing of vehicles is nowhere exempted, therefore, it is taxable under service tax.
Accordingly the company needs to obtain service tax registration
For more details, the following link may be helpful:
/articles/cenvat-for-automobile-dealers-15378.asp#.VBqlXpSSzfI
Rahul,
As stated earlier, sale of goods are not charged to service tax since the same is excluded from the definition of service. Therefore., irrespective of the purpose for which goods are used, service tax shall not be charged on their sale.
However, maintenace work carried out on such tractors are taxable and there are no exemptions for this service.
In case of any updates in this regard, will let you know.
CAclubindia
