Additional payments for Registration, Road Tax, RTO recovered part of taxable supply of leasing service: AAR

Case Details: Authority for Advance Rulings, Tamilnadu Sundaram Finance Ltd., In re - [2022] 145 taxmann.com 446 (AAR-TAMILNADU)

Judiciary and Counsel Details

• • T.G. Venkatesh & Smt. K. Latha, Member

Facts of the Case

The applicant was NBFC and also involved in business of leasing of machines, commercial and non-commercial vehicles. It filed an application for advance ruling to determine whether additional payments of Registration, Road Tax, RTO charges recovered from service recipients would form part of value of taxable supply of leasing service.

AAR Held

The Authority for Advance Ruling (AAR) observed that the base price of vehicle of leased vehicle would be calculated by adding cost of registration and road tax also known as ‘On road component’ services, which shall be capitalized in books of account of applicant. However, it was submitted by the applicant that services related to ‘on road component’ services would be provided by it in capacity of pure agent.

But it was observed by AAR that ‘On road component’ services would be procured on account of applicant which would enable vehicle to be used on road and subsequent lease. Therefore, it would be in nature of incidental expenses in relation to leasing of vehicles and can’t be considered as procured in capacity of ‘pure agent’ by applicant. Thus, it was held that these payments would be included in value of supply of leasing services.