2013 (6) TMI 607 - AT - Service Tax

Classification - Supply of cabs - Rent-a-Cab service - It is the contention of the advocate that they did not own the vehicle; that they had hired the same from other vehicle owners and supplied the vehicles to M/s. Mahindra & Mahindra as per the contract. The activity undertaken by them cannot be considered as Rent-a-Cab Service inasmuch s they have not undertaken any renting. - Held that - the agreement was for the purpose of supply of vehicles of required specifications. The taxable service means any service provided to any person by a rent-a-cab scheme operator in relation to renting of a cab and the terms rent a cab scheme operator means any person engaged in the business of renting cabs, and the cabs includes both motor cabs, maxi cabs, as defined in the Motor Vehicles Act, 1988. There is no dispute of the fact that the vehicle supplied by the appellant satisfied this criterion. There is no stipulation either in the Act or in the Rules that the person renting the cabs should also own the vehicles. So long as the person rents a cab either owned by him or cabs procured from elsewhere, the liability to pay service tax would arise and, therefore, the activity underta Regarding extended period of limitation - Held that - the show cause notice has been issued within the time-limit specified and the demand is not time-barred. Since the appellant did not file any returns they are rightly liable to penalty under Section 77 and we uphold the same. As regards the imposed under Section 76 the said penalty is attracted for failure to pay service tax by the due dates and there is no mens rea required to impose penalty under the said Section. Therefore, imposition of penalty under Section 76 is also sustainable in law. - Decided against the assessee.

Summary

Issues:
1. Classification of service under 'Rent-a-Cab Service'
2. Applicability of service tax and penalties
3. Allegations of suppression of information
4. Time-barred demand and imposition of penalties

Classification of service under 'Rent-a-Cab Service':
The appellant, engaged in providing transport solutions, supplied cabs to a client for staff transportation without registering with the Central Excise department or paying service tax. The department issued a show cause notice demanding service tax under 'Rent-a-Cab Service' classification. The appellant argued they did not own the cabs but hired them, and thus the service did not qualify as 'Rent-a-Cab Service.' However, the Tribunal found the agreement specified vehicle supply, driver provision, and payment based on mileage, meeting the 'Rent-a-Cab Service' criteria. Previous decisions cited by the appellant were overruled, establishing the activity as falling under the 'Rent-a-Cab Service' category.

Applicability of service tax and penalties:
The appellant contended they did not suppress information, challenging the invocation of an extended period for demand confirmation. The Tribunal noted the appellant provided details to the department belatedly, justifying the demand within the one-year limit from the department's knowledge. The imposition of penalties under Sections 76 and 77 was upheld, with Section 76 penalty justified for failure to pay service tax without requiring mens rea. The Tribunal concluded the demand and penalties were sustainable under the law.

Allegations of suppression of information:
The appellant argued against the allegation of suppressing information, citing previous decisions and lack of fraud or suppression allegations in the show cause notice. However, the Tribunal found the appellant's delayed information submission to the department supported the demand and penalties, rejecting the argument of non-suppression.

Time-barred demand and imposition of penalties:
Regarding the time-barred demand, the Tribunal considered the date of knowledge by the department as relevant for the time limit calculation, upholding the timely issuance of the show cause notice. The non-filing of returns justified the penalty under Section 77, while the penalty under Section 76 was deemed appropriate for failure to pay service tax by due dates, without requiring mens rea. The Tribunal upheld the penalties within prescribed rates and the amount in default.

In conclusion, the Tribunal dismissed the appeal on 26/03/2013, finding no merit in the appellant's arguments and upholding the demand for service tax under 'Rent-a-Cab Service,' along with the imposed penalties.