2011 (7) TMI 699 - AT - Service Tax

Demand - assessee contested that they have taken service tax registration at Mumbai as their registered office is situated in Mumbai and service has been rendered in Mumbai and therefore the Assistant Commissioner at Ratnagiri does not have jurisdiction to issue notice and recover service tax - renting of immovable property - Tribunal in the Ores India (P) Ltd. case (2008 -TMI - 31594 - CESTAT KOLKATA) has clearly held that as per Rule 3 of Service Tax Rules 1994 read with Board s order No.1/94 dated 29/06/94 it is the Commissioner in whose territorial jurisdiction the registered office of the service provider is located has the jurisdiction over him irrespective of the place where service is provided - Decided in favor of the assessee

Summary

Issues:
Jurisdiction of the Assistant Commissioner at Ratnagiri over service tax demand.
Validity of service tax demand for renting out a car with a driver.

Jurisdiction Issue Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise (Appeals), Pune-II regarding a service tax demand. The dispute arose as the assessee rented out a car with a driver to another company in Mumbai but was issued a notice for service tax demand by the Assistant Commissioner at Ratnagiri. The assessee argued that since their registered office was in Mumbai and the service was provided there, the Assistant Commissioner at Ratnagiri lacked jurisdiction. The Tribunal referred to a previous case and ruled that the Commissioner where the service provider's registered office is located has jurisdiction, regardless of where the service is provided. As both the service and the registered office were in Mumbai, the Assistant Commissioner at Ratnagiri had no jurisdiction. Consequently, the proceedings initiated at Ratnagiri were deemed unsustainable, and the department's appeal was dismissed.

Service Tax Demand Issue Analysis:
The case involved an assessee who rented out a car with a driver and received payments without discharging the service tax liability. A show-cause notice was issued for the demand of service tax, interest, and penalties. The assessee contended that they were not liable to pay service tax as they provided the vehicle with the driver, unlike a rent-a-cab scheme where the vehicle is provided without a driver. The Assistant Commissioner at Ratnagiri confirmed the service tax demand, interest, and penalties. However, the Commissioner (Appeals) set aside the order, stating that the Assistant Commissioner at Ratnagiri lacked jurisdiction. The Tribunal upheld this decision, emphasizing that the service was provided in Mumbai where the registered office was located, and the Assistant Commissioner at Ratnagiri had no authority over the activities in Mumbai. Therefore, the service tax demand and penalties imposed were deemed unsustainable in law, leading to the dismissal of the department's appeal.