2012 (10) TMI 636 - AT - Service Tax

Waiver of pre-deposit - Rent-a-Cab Service - appellants (state transport authority) allowed their buses to be chartered for transportation of passengers on charter basis on specific routes within the State of Karnataka as well as specific Inter-State routes. Held that - appellants were undertaking the business of operating, organizing or arranging tours. - prima facie case is against the assessee - pre deposit ordered partly.

Summary

Issues:
1. Waiver of pre-deposit and stay of recovery sought by Karnataka State Road Transport Corporation in relation to service tax and penalties demanded for the period from January 2007 to December 2009 under the head "Rent-a-Cab Service."

Analysis:
The appellant, Karnataka State Road Transport Corporation, filed applications seeking waiver of pre-deposit and stay of recovery concerning service tax and penalties amounting to Rs. 72,33,727/- for the period from January 2007 to December 2009 under the category of "Rent-a-Cab Service." The appellant argued that their activity of allowing buses to be chartered for transportation of passengers on specific routes did not constitute "Rent-a-Cab Service" but rather fell under "Tour Operator's Service." They referenced Final Orders from other Commissionerates supporting their claim for exemption from service tax. The appellant also highlighted financial hardships. However, the learned Addl. Commissioner (AR) opposed the applications, emphasizing the distinction between "rent-a-cab service" and "tour operator's service," noting that the former could only be provided by the cab owner. The AC(AR) argued that the appellant did not meet the criteria for "tour operator's service" based on the definition applicable during the relevant period.

Upon careful consideration, the Tribunal found that the appellant failed to rebut a crucial submission by the AC(AR) regarding the nature of "rent-a-cab service" and "tour operator's service." It was noted that the appellant, as the owner of the buses operated under charter contracts, did not fulfill all the requirements of "tour operator's service." Referring to the definition of "tour operator," the Tribunal observed that certain features of tour operations were lacking in the appellant's case. Drawing a distinction from a previous Final Order, the Tribunal concluded that the appellant did not establish a prima facie case against the service tax demand. The plea of financial hardships was deemed unsubstantiated.

Consequently, the Tribunal directed the appellant to pre-deposit Rs. 15,00,000/- within six weeks towards the service tax amount, with compliance to be reported by a specified date. Upon compliance, there would be a waiver of pre-deposit and stay of recovery for penalties and the remaining service tax amount.