2023 (2) TMI 1241 - AT - Service Tax

Levy of service tax - lease rental charges - Department alleged that leasing of vehicles is taxable service and appellant was liable to pay service tax on the same - HELD THAT - The issue on levy of service tax on lease rental charges has been decided by the Principal Bench of this Tribunal in the appellant s own case M/S. CARZONRENT (INDIA) PVT. LTD. VERSUS CST, DELHI 2017 (1) TMI 98 - CESTAT NEW DELHI where it was held that the appellants failed to sustain legally their plea regarding non-applicability of the provisions of Service Tax to the transactions of renting of motor cabs and on such consideration received. It is pertinent to note that the current show cause notice is a periodical one which has been adjudicated by the Commissioner vide the impugned order. There is no change in the factual matrix, and therefore there are no reason to deviate from the decision of this Tribunal in the Appellant s own case. As regards the request of the appellant for referring this matter before a Larger Bench in view of the contrary decision of the Mumbai bench of the Tribunal in the case of ARVAL INDIA PRIVATE LIMITED VERSUS PRINCIPAL COMMISSIONER OF SERVICE TAX IV AND (VICE-VERSA) MR CJ MATHEW, MEMBER (TECHNICAL) 2020 (9) TMI 125 - CESTAT MUMBAI , it is noted that the Tribunal has differentiated the decisions based on the facts, as is evident in para 7 of the order. There are no infirmity in the impugned order - appeal dismissed.

Summary

Issues:
1. Confirmation of service tax demand under section 73(1) of Finance Act, 1994.
2. Applicability of service tax on leasing of vehicles.
3. Discharge of VAT liability on lease rent.
4. Request for reference to a Larger Bench for decision on merits.

Analysis:
1. The appeal challenged the Order-in-Original confirming a service tax demand of Rs. 4,08,28,837 under section 73(1) of Finance Act, 1994, along with interest and penalty of Rs. 40,00,000. The appellant, a private limited company, was centrally registered with the Service Tax Commissionerate, Delhi for various services. The department alleged taxable service on leasing vehicles, issuing a show cause notice for service tax demand. The Commissioner's order confirmed the demand, leading to the appeal.

2. The appellant argued that leasing vehicles constituted deemed sales subject to VAT, which they were discharging appropriately. They highlighted paying VAT at a higher rate than the service tax rate during the relevant period. The appellant sought reference to a Larger Bench based on a Tribunal decision favoring their stance against a previous ruling in their case.

3. The Authorized Representative contended that the Tribunal had previously held the appellants liable for service tax on similar grounds. The appeal was deemed dismissible based on past decisions and the factual consistency with the impugned order.

4. The Tribunal, in its judgment, reiterated the previous decision regarding the liability of service tax on lease rental charges. It emphasized the legal nature of the transaction between the appellant and clients, analyzing the terms of agreements and statutory provisions. The Tribunal found no reason to deviate from its earlier decision and dismissed the appeal, upholding the impugned order.

This comprehensive analysis covers the issues of service tax demand confirmation, applicability of service tax on leasing vehicles, discharge of VAT liability, and the request for reference to a Larger Bench, detailing the arguments presented by both parties and the Tribunal's final decision.