2009 (4) TMI 477 - HC - Service Tax

Definition U/s 65 - service tax on buses plied by UPSRTC - Aggrieved party - The service tax is being imposed on the basis of individual contract entered into between the bus owner and the UPSRTC - It has been submitted that the individual contracts squarely falls within the definition of Rent-a-cab operator services provided under section 65 of the Finance Act, 1994. Held that - Full Bench judgment of Andhra Pradesh High Court (1985 -TMI - 72127 - Andhra High Court) provides that where transport corporation enters into individual contract with the bus owner with plying of their vehicle then such contract shall not fall within the definition of stage carriage but it shall deem to be carriage. The condition No. 4 given in para 22 of the judgment (1985 -TMI - 72127 - Andhra High Court) clears the position - respondent had to take a decision on the basis of definition provided by section 65 of the Finance Act, 1994 of the word rent-a-cab operator . The service tax is payable by a private bus operator whose buses are attached with the UPSRTC, through individual agreements. UPSRTC does not seem to be aggrieved party, coming into the way of respondent to collect service tax from the private bus operator, whose buses are said to attach with the UPSRTC and falls within the category of Rent-a-cab operator .

Summary

Issues involved:
Interpretation of service tax imposition on buses owned by a state corporation; Application of section 65 of the Finance Act, 1994; Relevance of individual contractual agreements between bus owners and the corporation; Comparison with Full Bench judgment of Andhra Pradesh High Court on contract carriage definition.

Analysis:

1. The case involved a writ petition filed by a State Road Transport Corporation against an order requesting a list of contractual assignments between private bus owners and the corporation. The petitioner argued that service tax was imposed on buses owned by the corporation, while the respondents clarified that service tax was applicable to bus owners providing services on a contract basis to the corporation as per section 65 of the Finance Act, 1994.

2. The petitioner relied on a Full Bench judgment of the Andhra Pradesh High Court regarding the definition of contract carriage. The judgment emphasized that a transport vehicle used under a single contract for a fixed sum with the owner is considered a contract carriage, not a stage carriage where multiple passengers contract individually. The court noted that tax is based on vehicle use, not permit nature, allowing tax levy for breach of permit conditions.

3. The court analyzed the Andhra Pradesh High Court judgment and the application of section 65 of the Finance Act, 1994, to determine service tax liability for private bus operators contracting with the corporation. It concluded that service tax was payable by bus owners with individual agreements with the corporation, falling under the definition of 'Rent-a-cab operator services' as per the Act.

4. Considering the legal provisions and precedents, the court found no grounds for interference under Article 226 of the Constitution of India. The writ petition was dismissed, emphasizing that the State Road Transport Corporation was not adversely affected by the service tax collection from private bus operators under individual agreements, aligning with the definition of 'Rent-a-cab operator' as per the Finance Act, 1994.

5. The judgment highlighted the distinction between contract carriage and stage carriage based on single or multiple contracts with the vehicle owner, reinforcing the application of tax laws concerning vehicle use and contractual agreements. The court's decision aligned with the statutory interpretation and legal principles, dismissing the writ petition without costs.