2013 (6) TMI 585 - AT - Service Tax

Rent-a-Cab service - appellant ut their buses at the disposal of PRTC - Held that - the stand of the appellants themselves is that they are not providing transport service to PRTC but have given their buses on hire. In view of this, following the ratio of the Tribunal judgment in the case of Deepak Transport Bus Service vs. CCE, Pune -III (2012 (6) TMI 390 - CESTAT, Mumbai) we hold that the activity of the appellants would be taxable as rent a cab service under Section 65 (105) (o) and readwith Section 65 (20) and 65 (91) of the Finance Act, 1994. While upholding that the service provided by the appellants is taxable as rent a cab service, we remand the matters to Commissioner (Appeals) for considering the appellant s plea with regard to their eligibility for the benefit of Notifications No. 1/2006-ST and 6/2005-ST and re-quantification the duty liability and also redetermination of the quantum of penalty which would be proportionate to service tax demands upheld.

Summary

Issues:
Interpretation of whether the services provided by the appellants can be considered as rent-a-cab service under relevant sections of the Finance Act, 1994. Assessment of the appellants' liability to pay service tax on the amount received from PEPSU Road Transport Corporation (PRTC). Examination of the eligibility of the appellants for abatement under specific notifications and exemption benefits under the Finance Act, 1994.

Analysis:
The dispute in this case revolved around whether the services provided by the appellants, who owned buses and entered into contracts with PEPSU Road Transport Corporation (PRTC), could be classified as rent-a-cab service taxable under the Finance Act, 1994. The department contended that the appellants fell under the definition of rent-a-cab scheme operator and were liable to pay service tax on the amounts received from PRTC. The department issued show cause notices demanding service tax, interest, and penalties for the period in question.

Upon adjudication, the Jurisdictional Assistant Commissioner confirmed the service tax demands, interest, and penalties imposed on the appellants. The Commissioner (Appeals) upheld these orders, leading to the filing of appeals by the appellants. The appellants argued that their services did not constitute rent-a-cab service as they only provided buses to PRTC along with drivers, bearing expenses for maintenance, diesel, and repairs. They highlighted that PRTC operated the buses on various routes and conducted ticket sales, with the appellants receiving payments based on limited kilometers covered per day.

The appellants contended that they did not provide transport services to PRTC and, therefore, should not be categorized as rent-a-cab operators. They referenced relevant judgments and exemption notifications to support their position. The department argued that the appellants' activities fell within the definition of rent-a-cab service as per the Finance Act, 1994, and cited precedent cases to support their stance.

After considering the submissions and reviewing the facts, the Tribunal found the appellants' activities to be taxable as rent-a-cab service under the Finance Act, 1994. However, the Tribunal noted that the Commissioner (Appeals) had not assessed the appellants' eligibility for abatement under specific notifications and exemption benefits. As a result, the Tribunal remanded the matters back to the Commissioner (Appeals) for further consideration on these aspects, directing a re-evaluation of duty liability and penalty quantification proportional to the upheld service tax demands. The appeals were disposed of accordingly.