2008 (7) TMI 27 - AT - Service Tax

Giving cabs on hire to their clients - whether during 1.4.2000 to 31.3.2004, the appellants were acting as Rent-a-Cab operator - point has to be decided by the lower authority after ascertaining the facts, for which, this matter has to be remanded to Commissioner for de novo adjudication - since Appellant had informed the dept. about his activity as early as in November 2000, there is no suppression, hence only the normal limitation period u/s 73 (1) would be available to the Revenue

Summary

Issues:
Interpretation of the definition of "Rent-a-Cab" operator under the Finance Act, 1994 for the purpose of service tax liability during a specific period.

Analysis:
The appeal revolved around determining whether the appellant's activity of providing cabs on hire to clients falls within the definition of a "Rent-a-Cab" operator as per the Finance Act, 1994. The appellant argued that their service did not qualify as a rent-a-cab operator scheme since they only provided cabs on a hire basis, not rent. They highlighted the distinction between renting and hiring, emphasizing that in a rent-a-cab scheme, the vehicle is temporarily out of the owner's possession, unlike in a taxi hiring scheme where the vehicle remains under the operator's control. The appellant also cited precedents to support their position, including a Tribunal case that differentiated between rent-a-cab services and pure transport services based on ownership and control of the vehicles.

The Departmental Representative contended that the appellant's activity should be considered under the rent-a-cab scheme operator's service, citing a Tribunal judgment that emphasized taxing services involving hiring or renting cabs for longer durations. They argued that the intention was to tax providers of such services, irrespective of the terminology used. Additionally, the Department invoked a longer limitation period due to the appellant's failure to file returns.

The Tribunal analyzed the definitions and historical context of the rent-a-cab scheme operator's service under the Finance Act, noting the requirement of temporarily parting with vehicle possession for consideration. The Tribunal emphasized that the taxable activity is the renting of cabs, where the client has control over the vehicle during the rental period. However, the Tribunal observed a lack of findings regarding the nature of the appellant's services in the lower authority's decision and remanded the matter for further examination.

Moreover, the Tribunal acknowledged the appellant's early communication with the department regarding their activities and deemed the longer limitation period inapplicable due to the absence of willful suppression of facts. Consequently, the Tribunal remanded the case for reevaluation by the Commissioner to determine if the appellant's services align with the rent-a-cab operator's service definition and to quantify any service tax liability within the normal limitation period.

In conclusion, the Tribunal's decision highlighted the importance of differentiating between renting and hiring in the context of service tax liability under the rent-a-cab scheme operator's service, emphasizing the need for a detailed assessment of the appellant's services to determine tax applicability accurately.