2011 (9) TMI 737 - AT - Service Tax

Demand - Rent-a-Cab - Notification No. 9/2004-S.T., dated 9-7-2004 - In the matter of cum-duty benefit, the fact that the amount realized by the appellant is cum duty is not disputed by the Revenue - It appears likely that the supplementary bills may not have been paid by IFFCO and therefore, this fact has to be verified by the adjudicating authority and if the supplementary bills are not paid by M/s. IFFCO, the benefit of cum duty should be extended to the appellant Regarding penalty - Basically penalties under Sections 76 and 78 are for the same offence which principle has been recognized by amendment done w.e.f. 10-5-2008 by Finance Act, 2008 by adding a proviso under Section 78 - In this case the penalties imposed in the adjudication orders are based on quantum of duty worked out without following judicial principles and he could not have paid 25% of duty determined in the order-in-original - Appeal is allowed by way of remand

Issues:
1. Applicability of service tax on rental services provided without registration.
2. Eligibility for exemptions under Notification No. 6/2005-S.T. and Notification No. 9/2004-S.T.
3. Claim for exemption under Notification No. 3/99-S.T. and Section 80 of the Finance Act.
4. Dispute regarding penalties imposed under Sections 75A, 76, 77, and 78 of the Finance Act.

Issue 1: Applicability of service tax on rental services provided without registration.
The appellant rented out a Maruti Van without registering under service tax laws, leading to a demand for service tax. The appellant argued that as per the Rent-a-Cab Scheme, he did not fall under the scheme's scope due to having only one vehicle. The Tribunal disagreed with the lower authorities, holding that the appellant was eligible for exemption under Notification No. 9/2004-S.T. since he was not registered and did not avail Cenvat credit, thus allowing the exemption.

Issue 2: Eligibility for exemptions under Notification No. 6/2005-S.T. and Notification No. 9/2004-S.T.
The appellant claimed eligibility for exemptions under Notification No. 6/2005-S.T. and Notification No. 9/2004-S.T. The Tribunal found that the appellant qualified for the exemption under Notification No. 9/2004-S.T. as he had not availed Cenvat credit and was not registered with the Service Tax Department. The Tribunal directed the department to verify if the appellant met the criteria for the exemption under Notification No. 6/2005-S.T.

Issue 3: Claim for exemption under Notification No. 3/99-S.T. and Section 80 of the Finance Act.
The appellant contended that he believed he was exempt from service tax under Notification No. 3/99-S.T. and sought the benefit of Section 80 of the Finance Act for waiving penalties. The Tribunal acknowledged the appellant's belief but focused on the eligibility for specific exemptions under relevant notifications, ultimately allowing the exemption under Notification No. 9/2004-S.T.

Issue 4: Dispute regarding penalties imposed under Sections 75A, 76, 77, and 78 of the Finance Act.
Penalties were imposed under Sections 75A, 76, 77, and 78 of the Finance Act. The Tribunal set aside the penalty under Section 76 due to the amendment recognizing penalties under Sections 76 and 78 as for the same offense. The appellant was granted the option to pay 25% of the duty evaded for closure of the matter. Penalties under Sections 75A and 77 were waived, with the appellant required to pay the penalty under Section 77. The Tribunal allowed the appeal partially by adjusting the quantum of tax and penalties, leading to a remand for further proceedings.

This detailed analysis of the judgment addresses the issues related to the applicability of service tax, eligibility for exemptions, claims for exemption under specific notifications, and disputes regarding penalties imposed under various sections of the Finance Act. The Tribunal's findings and decisions reflect a thorough consideration of the appellant's arguments and the legal provisions involved in the case.

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