AAR holds that
registration, insurance and handling charges received and paid on behalf of
customer of motor vehicle are includible in ‘sale price’ thereof in terms of
Section 2(25) of Maharashtra VAT Act, under the deeming fiction that “any sum
charged for anything done by the seller in respect of the goods at the time of
or before delivery thereof”; Consequently, observes that “pre-delivery charges
are brought within the meaning of the expression “sale price” and even if a
sale has taken place, but delivery has not been taken, all pre-delivery charges
would form part of the sale price”, while drawing inference from SC ruling in
case of KTC Automobiles; Explains that motor vehicle remains in the category of
‘unascertained’ or ‘future’ goods till its appropriation to the contract of
sale and sale gets concluded only upon compliance with stipulated conditions to
make it road worthy in terms of Motor Vehicle Act, accordingly, “possession of
a motor vehicle passes or can pass legally to the purchaser only after
obtaining valid registration under the Motor Vehicles Act and the purchaser
gets entitled to use the vehicles in public places”; However, holds that tax
liability on handling or service charges related to registration shall be
protected for the period July 11, 2011 to January 29, 2016 considering that
Bombay HC decision in Sehgal Autoriders Pvt. Ltd. which held that such charges
were not liable to VAT, was subsequently reversed by Apex Court in KTC
Automobiles; Relying on various judicial precedents, AAR holds that
reimbursement of discounts offered to customers by automobile company shall
form part of ‘sale price’, while allowing input tax credit of motor vehicles
used as ‘Demo Vehicles’ provided that they are not capitalized : AAR
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