Unauthorised service stations too come under tax

We are a multi-car specialty service station. We service cars of all manufacturers but we are not authorised service station of any manufacturer. Are we liable to service tax even if our turnover exceeds Rs10 lakh? —Hari Kalgutkar
With effect from May 1, 2011, the definition of taxable service under 65(105) (zo) of an authorised service station has been amended. The existing definition of taxable service is replaced with a new definition to cover all persons and all motor vehicles other than those meant for carrying goods and three-wheelers (auto rickshaws). According to the new definition of taxable service: It applies to services “to any person, by any other person, in relation to any service for repair, re-conditioning, restoration or decoration or any other similar services, of any motor vehicle other than three-wheeler scooter auto-rickshaw and motor vehicle meant for goods carriage”

The CBEC vide letter no DOF 334/3/2011-TRU, dated 28-02-2011 has clarifies; the existing service is being substituted with a new definition to cover:

a) Services provided by any person — whether authorised service station or otherwise; 
b) All motor vehicles other than vehicles used for goods transport and three-wheeler auto-rickshaws;
c) Repair, re-conditioning or restoration — which are already taxable — and services of decoration and any other related services.

Prior to the above amendment, services of repair, reconditioning, restoration or servicing of any motor cars — light motor vehicle or two-wheeled motor vehicles — were taxable if they were provided by a service station or a centre which was authorised by the manufacturer. Now an amendment is made whereby all persons/service centres, and all motor vehicles other than those meant for goods carriage or three-wheelers, shall be liable to service tax. Even decoration services and any other related services shall now be taxable. Now the scope of the existing taxable service is widened to include all service stations including even local garages that are not authorised by the manufacturer.

Hence, you will be liable to service tax if your gross receipts exceed Rs10 lakh even if yours is not an authorised service station.

The writer is with M Sheth & Co, a chartered
accountancy firm in Mumbai, and can be reached at mshethco@yahoo.co.in