2014 (3) TMI 605 - AT - Service Tax

Rent a Cab Operator Service - Scope of the term Motor Cab - Renting or Hiring - Penalty u/s 77 & 78 - Held that - assessee has been supplying vehicles such as Maruti Van/Maruti Suzuki/Alto having seating capacity 4 1 including the driver and Ambassadors having seating capacity 4 1 and 5 1 including the driver to M/s. NEEPCO Ltd., Shillong as stated by the said assessee in his statement on 27.05.2009 and also the documents submitted vide their letter dated 15/06/2009 indicates that all the vehicles supplied by them to NEEPCO Ltd. are vehicles having seating capacity of 4 1 and 5 1. As the said vehicles are constructed or adapted to carry not more than 6 passengers excluding the driver, therefore, they conform to the definition of Motor Cab as per Section 65 (70) w.e.f. 14.05.2003 of Chapter V of the Finance Act. Definition of Rent a Cab Scheme Operator was amended w.e.f. 16.10.1998 vide Finance (NO2) Act 1998 which reads as Rent a cab Scheme Operator means any person engaged in the business of renting of cabs, thus the requirement of operator being registered under the Rent a Cab Scheme Operator had been dispensed with. Consequently, any person engaged in the business of renting of cabs was required to pay service tax irrespective of number of vehicles engaged by him in providing this service. Lower authorities have not examined the issue whether the activity of the appellant falls under the ambit of hiring or as the case may be renting. - appellant s case requires re-examination in light of each of their contracts entered by them and the various service recipients. - matter remanded back.

Summary

Issues:

1. Whether the appellant's business of supplying/leasing private registered vehicles constitutes providing 'Rent a Cab Operator Service' and is liable for service tax.
2. Whether the vehicles supplied by the appellant fall under the definition of cabs as per the Motor Vehicle Act, 1988.
3. Whether the services provided by the appellant qualify as 'rent a cab' operator scheme for the purpose of service tax.
4. Whether the lower authorities adequately examined whether the activity of the appellant falls under 'hiring' or 'renting'.
5. Whether the case requires re-examination in light of the contracts entered by the appellant and the service recipients.

Analysis:

1. The appellant was engaged in supplying/leasing private registered vehicles to customers without filing service tax returns. A show cause notice was issued demanding service tax for providing 'Rent a Cab Operator Service.' The adjudicating authority confirmed the demand and imposed penalties. The Commissioner (Appeals) modified the order, confirming a reduced duty amount and imposing penalties. The appellant challenged this order.

2. The appellant contended that the vehicles supplied were not motor cabs/maxi cabs and were excluded from the definition of cabs under the Motor Vehicle Act, 1988. They provided evidence of agreements showing the vehicles were hired, not rented. Citing a tribunal judgment, it was argued that the services provided did not fall under 'rent a cab' operator scheme.

3. The Revenue argued in favor of the Commissioner (Appeals) findings. The adjudicating authority confirmed that the vehicles supplied by the appellant met the definition of 'Motor Cab' under the Finance Act.

4. The Tribunal found that the lower authorities did not sufficiently examine whether the appellant's activity constituted 'hiring' or 'renting.' It was deemed necessary to re-examine the contracts between the parties to determine the nature of the services provided.

5. Considering the facts, the Tribunal remitted the case back to the adjudicating authority for a fresh examination. The authority was directed to review the contracts to ascertain if the services were for 'rent-a-cab' or otherwise. The appeal was allowed by way of remand, emphasizing the need for a fair hearing for the appellant. The Commissioner (Appeals) order was set aside.

This detailed analysis outlines the legal proceedings, arguments presented, and the Tribunal's decision to remand the case for further examination, ensuring a fair assessment of the appellant's business activities and service tax liability.