2011 (7) TMI 162 - AT - Service Tax

Demand - Rent-a-Cab Operator - The most of the cases, the income which the appellants have not reflected in their ST-3 returns, pertains to cabs whose carrying capacity is more than 12 passengers and hence they are out of the purview of service tax as only maxi cabs as defined in Motor Vehicle Act, 1988 are covered in the definition - some income is not taken by them in their ST-3 Return for the reasons that they are sub contractors of a main Rent-a-Cab Operator and in terms of a clarification of Service Tax Commissionerate, Ahmedabad vide letter F. No. STC/04-06/CLF/TECH/2010 dated 02.8.2010, that they are not liable to pay service tax - Held that ervices rendered by the appellants for the period mentioned are not taxable - Decided in favour of the assessee

Summary

Issues:
1. Taxable services declaration discrepancy.
2. Applicability of service tax on Rent-a-Cab Operators.
3. Justification of income not reflected in returns.
4. Limitation period for non-payment discovery.
5. Liability for service tax due to lack of knowledge.
6. Interpretation of Rent-a-Cab service definition.

Analysis:
1. The appellants, engaged in Rent-a-Cab Operator services, disputed the demand of Rs. 2,13,082/- for declaring less value of taxable services in their returns. They argued that their activities did not fall under the Rent-a-Cab scheme definition, hence not liable for service tax. The Commissioner (Appeal) acknowledged the discrepancy but required evidence to justify the income not reflected in returns, especially for cabs with more than 12 passengers, exempt from service tax. Another argument was non-taxable income due to being sub-contractors, supported by a Service Tax Commissionerate clarification.

2. The Commissioner (Appeal) found the non-payment discovery during an audit, indicating the department learned of the issue when issuing the show cause notice. The appellants contended they were unaware of the tax liability due to confusion regarding service tax applicability. They paid tax with interest for the period 01.04.2000 to 31.03.2003, despite the confusion.

3. Relying on the Tribunal's decision in a similar case, the judge examined the issue of service tax liability on hiring out cabs. The definition of Rent-a-Cab scheme operator was analyzed, emphasizing engagement in the cab rental business. A previous Tribunal decision favored the appellants, emphasizing the need for evidence to distinguish between hiring and renting vehicles. The judge gave precedence to a Division Bench decision over a Single Member Bench decision, ultimately ruling in favor of the appellants, declaring their services as non-taxable.

This detailed analysis covers all the issues involved in the legal judgment, providing a comprehensive understanding of the case and the judge's decision.