2014 (10) TMI 817 - HC - Service Tax

Rent a cab scheme - principle of estoppel in law against a party - appellant has admitted the liability whereas high court has decided that the activity is not taxable in Commissioner, Customs & Central Excise Versus Sachin Malhotra, Raj Kumar Taneja, M/s. Shiva Travels 2014 (10) TMI 816 - UTTARAKHAND HIGH COURT Case was de-linked on the basis of the fact that the respondent / assessee had effected payments and also filed affidavits to the effect that he will be paying the balance of the amount - Held that - Article 265 of the Constitution of Indian mandates that no tax can be levied or collected except as provided by law - fact that the respondent / assessee had made some payments and also made promise to make further payments cannot be used against our refusing to interfere with the impugned order. For the reasons, we have already recorded more elaborately in our common judgment passed and connected case, we have, inter alia, found that when there is only a contract of hire and there is no renting of the cab, there is no question of the assessee being assessed in respect of services rendered in connection with rent a-cab as there is no renting at all. - Decided against the revenue.

Summary

Issues: Taxability of services under the rent-a-cab scheme, Compulsory payments made by the assessee, Refund claim and passing on the burden to the consumer, Constitutional mandate under Article 265

In this judgment by the High Court, the primary issue revolved around the taxability of services under the rent-a-cab scheme. The court referred to a previous judgment where it confirmed the tax liability against the appellant. However, in the present case, the respondent had made payments under compulsion and promised to pay the remaining balance. The court considered the legal implications of such payments citing the Dunlop India Ltd. case and the Mafatlal Industries Ltd. case. The court noted that the department did not contest the claim made by the assessee regarding the payments. Additionally, the court emphasized Article 265 of the Indian Constitution, which prohibits the levy or collection of taxes except as provided by law. Despite the payments made by the assessee, the court held that there was no renting of the cab, only a contract of hire, and therefore, the services rendered were not taxable under the rent-a-cab scheme. Following the reasoning of a previous judgment, the court dismissed the appeal based on the lack of renting of the cab, thus upholding the impugned order.