Telangana High Court
The State Of Telangana vs M/S. Malik Enterprises on 8 November, 2023
Bench: P.Sam Koshy, N.Tukaramji
THE HON'BLE SRI JUSTICE P.SAM KOSHY
AND
THE HON'BLE SRI JUSTICE N.TUKARAMJI
T.R.E.V.C. No.3 of 2021
ORDER:(per Hon'ble Sri Justice P.SAM KOSHY)
Heard Mr.Raji Reddy, learned Senior Standing Counsel for the
Department and Mr.Karthik Ramana Puttamreddy, learned counsel for
the respondent. Perused the material available on record.
2. The instant Revision Petition is filed by the State Government
assailing the order passed by the Telanagana Value Added Tax
Appellate Tribunal (for short 'the Tribunal'), Hyderabad in
T.A.No.422 of 2011, dated 15.05.2020.
3. Vide the impugned order, the Tribunal has allowed the appeal of
the assessee, so far as the action on the part of the State authorities in
levying the tax on the handling charges collected by the assessee for
the purpose of providing certain post sale services to the purchasers of
the vehicles from the assessee's showroom.
4. Learned State counsel relying upon the decision in the case of
Mohd. Ekram Khan & Sons v. Commissioner of Trade Tax, U.P.
Lucknow 1, contended that the Tribunal has not property appreciated
(2004) 39 APSTJ 150.
the said judgment and have wrongly extended the benefit to the
assessee.
5. The question which was put for consideration before the Tribunal
was, whether the handling charges extended warranty charges
collected for temporary as well as permanent registration charges by
the respondent authorities would form part of pre-sale consideration or
post-sale consideration so as to be exigible to tax?
6. The admitted fact evident from the pleadings of either side is that
the handling charges that is being collected by the respondent dealer is
in respect of certain ancillary charges which is incurred by the
purchasers of vehicle. The charges paid are for the purpose of getting
the temporary as well as the permanent registration of the vehicle from
the concerned transport authorities, so also for the purpose of getting
the vehicle duly insured with the concerned insurance company and
further the charges are for the purpose of getting warranty extended of
the said purchased vehicle.
7. From the aforesaid items referred to, it would be evident that these
are the services which are only required post-sale of the vehicle by the
dealer to the respective purchaser. Moreover, these are services which
are not mandatorily required for the purchaser to avail from the said
dealer himself. The purchaser has right and liberty to get things done
of his own and in such circumstances, the handling charges would be
required to be paid.
8. These very facts were duly considered extensively by the Tribunal
while considering the contention of the Department. The Tribunal has
taken into consideration the provisions of law and has also relied upon
a decision of the Bombay High Court in the case of Additional
Commissioner of Sales Tax, VAT-III, Mumbai V. Sehgal Autoriders
Pvt. Ltd., 2. In the said case also, the issue before the Bombay High
Court was, whether handling or service charges received by the
authorized dealers from the customers for the aforementioned works
would constitute part of the sale price or not? The Bombay High Court
had after thorough discussion on the issue negated the contention of
the Government and had held that such charges would not be exigible
to tax.
9. Given the said facts and circumstances of the case, we are of the
considered opinion that the finding arrived at by the Tribunal cannot in
any circumstance held to be un-reasonable or contrary to any of the
statutory provisions. We also do not find any substantial question of
(2011) 43 VST 398.
law made out by the State Government calling for an interference with
the impugned order. Thus, the Tax Revision Petition fails and is
accordingly rejected.
10. As a sequel, miscellaneous applications pending if any, shall stand
closed. No order as to costs.
_________________
P.SAM KOSHY, J
_________________
N.TUKARAMJI, J
08.11.2023
Aqs
