2008 (9) TMI 24 - AT - Service Tax

Tata Sumo & Maruti Esteem given on rent order of original authority that impugned vehicles qualify as motor cab & maxi cab respectively, so assessee is rendering the service of Rent-a-cab Scheme Operator , is correct revenue submission that only the definition of cab under the Motor Vehicles Act is relevant and compliance to other formalities under Motor Vehicles Act are not pre-requisite for levying tax, is acceptable since appellant is a small businessman, penalty is set aside

Summary

Issues:
Interpretation of the definition of "cab" under the Motor Vehicles Act and its application to service tax liability.

Analysis:
The case involved a small businessman renting out vehicles to a corporate entity, leading to a dispute over the classification of the vehicles as cabs and the consequent service tax liability. The appellant argued that the vehicles did not meet the criteria of cabs under the Motor Vehicles Act, as they did not comply with certain formalities and were not used for general passenger transportation. The Departmental Representative contended that the definition of cab under the Motor Vehicles Act was sufficient to classify the vehicles as motor cab and maxi cab, subjecting them to service tax as rent-a-cab service.

Upon examining the relevant provisions of the Finance Act and the Motor Vehicles Act, the Tribunal noted that the term "cab" encompassed both motor cab and maxi cab, as defined in the Motor Vehicles Act. The Tribunal clarified that the linkage between the two Acts did not necessitate full compliance with all Motor Vehicles Act requirements for a vehicle to be considered a cab for service tax purposes. The intention was to tax services utilizing various types of vehicles for passenger transport, as indicated by the definitions of "rent-a-cab operator" and "cab" in the Finance Act.

Ultimately, the Tribunal upheld the service tax demand while setting aside the penalties imposed on the appellant. Recognizing the appellant's status as a small businessman in a small town, the Tribunal extended the benefit of Section 80 due to a reasonable cause for the appellant's failure to adhere to the service tax law. The appeal was disposed of with the decision to uphold the service tax demand and waive the penalties, concluding the matter in favor of the appellant.

This judgment clarifies the interpretation and application of the definition of "cab" under the Motor Vehicles Act concerning service tax liability, emphasizing the legislative intent to tax services involving various types of vehicles for passenger transportation. The decision also highlights the Tribunal's consideration of the appellant's circumstances in granting relief under Section 80 due to a reasonable cause for non-compliance with the service tax law.