2013 (11) TMI 1460 - AT - Service Tax

Penalty u/s 77 and 78 - Enhancement of penalty - Held that - Appellant was engaged in the activity of transportation of written answer sheets collected from various District Collection centres and deliver the same to the Nagpur University and the payment is on the Kilometre basis as per the work order. There is no evidence on record to show that the cab was hired on monthly, weekly or daily basis. In view of the terms and conditions of the work order, we find merit in the contention of the appellant, that the appellant has not provided taxable service of Rent-a-Cab Operator services. In view of this, the demand and consequential penalty is set aside. As the demand is set aside, therefore, there is no question of imposition of any penalty - Decided against Revenue.

Summary

Issues involved:
- Appeal against demand of service tax and penalty
- Interpretation of "Rent-a-Cab scheme operator" services
- Consideration of work order terms and conditions
- Application of Section 65 of Finance Act, 1994

Analysis:
1. Appeal against demand of service tax and penalty: The appellant, M/s Swapnashilp Travels, filed an appeal against the impugned order upholding the demand of service tax and restricting the penalty amount to 25% of the service tax imposed under section 78, with a reduction in the penalty imposed under section 77 to Rs.1,000. The Revenue also filed an appeal against the same order, seeking to enhance the penalty. The Tribunal noted the common issue in both appeals and decided to hear them together.

2. Interpretation of "Rent-a-Cab scheme operator" services: The Revenue issued show-cause notices demanding service tax, alleging that the appellant provided "Rent-a-Cab scheme operator" services while transporting answer sheets for Nagpur University. However, the appellant contended that the vehicles were used for transportation of answer sheets based on a work order from the University, where payment was on a per kilometer basis. The appellant argued that the service provided did not fall under the definition of "Rent-a-Cab scheme operator" services as per the Finance Act, 1994.

3. Consideration of work order terms and conditions: The Tribunal examined the terms and conditions of the work order, which required the appellant to collect answer sheets from various District Collection Centres and deliver them to the University on a kilometer basis payment. It was observed that there was no evidence to indicate that the cab was hired on a monthly, weekly, or daily basis. Based on the specific nature of the services provided and the payment structure outlined in the work order, the Tribunal found merit in the appellant's argument that the service rendered did not constitute "Rent-a-Cab scheme operator" services.

4. Application of Section 65 of Finance Act, 1994: Referring to the definitions under Section 65 of the Finance Act, 1994, the Tribunal analyzed the provisions related to "Rent-a-Cab scheme operator" services and taxable services. Considering the appellant's activity of transporting answer sheets as per the work order terms, the Tribunal concluded that the appellant had not provided taxable services falling under the category of "Rent-a-Cab scheme operator." Consequently, the demand for service tax and the associated penalty were set aside, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal dismissed the Revenue's appeal, ruling in favor of the appellant based on the interpretation of the services provided under the work order and the relevant provisions of the Finance Act, 1994.