news round up - Taxmann

218 Goods & Services Tax Cases - Reports [Vol. 1
vehicle reduced by the value of the customer’s old vehicle fixed by the
broker. The old vehicle was delivered by the customer then and there and
the broker took over the possession of the same with the documents.
According to the assessee, the broker later sold the old vehicles delivered
by the customers and remitted the value earlier fixed to the assessee with
which the entire price of the new vehicles sold to the customers got paid.
Even though, old two wheelers were purchased from customers and
resold later by the assessee and the broker in tantum, neither the assessee
nor the broker conceded any purchase and sale of old vehicles. In view of
the non-payment of tax on the sale of old vehicles, the Intelligence Officer
levied penalty for evasion of tax under section 67(1). The first appeal
having failed, the assessee approached the Tribunal with second appeal
and the Tribunal, though confirmed the penalty yet reduced the quantum
to equal amount of tax as against double the amount levied and sustained
in the first appeal.
On appeal :
HELD
The first question to be considered was whether the exchange mela
involving taking of old vehicle from the customer and replacement of the
same with a new one involved purchase of the old vehicle from the
customer. It was the admitted position that on the customer’s bringing the
old vehicle, its value was fixed by the broker and it was up to the customer
to accept the value or reject the same. If the customer accepted the value
offered by the broker, then he surrendered the old vehicle along with
papers and purchased a new one from the assessee by remitting the value
of the new two wheeler, reduced by the value fixed for the old one by the
broker. Once this transaction or exchange was finalised, then the assessee
had no right to claim the balance sale consideration of the new vehicle sold
to the customer irrespective of whether the value of the old vehicle fixed by
the broker was realised by sale of the old vehicle surrendered by the
customer or not. In other words, there was clear sale of the old vehicle by
the customer by delivering the possession of the same along with its
registration certificate and transfer documents in terms of the Motor
Vehicles Rules. The consideration paid to him was by way of adjustment of
the purchase value of the old vehicle, towards the sale price of the new
vehicle. It was the conceded position that the assessee treated the sale of the
new vehicle under the exchange scheme as full and complete with no debit
balance of price in the customer’s account. Therefore, purchase of old
vehicle from the customer was complete when new vehicle was sold to him
by recovering its value reduced by the cost of the old vehicle taken over from
the customer. [Para 3]
The next question to be considered was as to whether the assessee
purchased old vehicle or whether it was the broker who had purchased the
old vehicle. The terms of arrangement between the assessee and the broker
for purchase and sale of the old vehicle were not disclosed to the depart-
GOODS & SERVICES TAX CASES ❑ JANUARY 20 - FEBRUARY 4, 2010 ◆ 94
A
B
C
D
E
F
G