9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (3) TMI 1588 - AT - Service TaxLevy of service tax - deemed sale or rent a cab scheme operator service - operating lease entered by the appellant with their client in respect of the motor vehicles provided by them in terms of MLA - service tax is leviable on the charges collected by the appellant towards Fleet Management Service, as part of the lease rent should be subjected to service tax or not - extended period of limitation - penalties. Whether the operating lease entered by the appellant with their client in respect of the motor vehicles provided by them in terms of MLA, are cases of deemed sale , as per Article 366 (29A) (d) of the Constitution of India and will be subjected to sales tax/ VAT, or they are covered by the definition of rent a cab scheme operator service as defined by Section 65(91) of the Finance Act, 1994 and taxable service under section 65(105)(o) of the said Act? - HELD THAT - After taking note of the agreement Commissioner has in the impugned order, analyzed the agreement, and have concluded that the condition at d of the Board Circular by referring to the decision in case BHARAT SANCHAR NIGAM LTD. (BSNL) VERSUS UNION OF INDIA 2006 (3) TMI 1 - SUPREME COURT , is not satisfied and hence the transaction in terms of operating lease cannot be said to be one of deemed sale as per Article 366 (29A) (d) of the Constitution of India. Commissioner has concluded in the impugned order by referring to the various clauses in the agreement that there was no transfer of the right to use. However while doing so his emphasis is more on the transfer in the property of the vehicle(s) - the transfer of right to use cannot be equated to transfer in the property of vehicles . The intent of the transaction undertaken needs to be determined in terms of the various clauses of the agreement. Since as per the terms of the agreement as stated in the above table, we find that the conditions as laid down by the Hon ble Apex Court in case of BSNL are satisfied, there are no hesitation in holding that the transaction is of deemed sale as per Article 366 (29A) (d) of the Constitution of India - It is also found that co-ordinate bench has in 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 concluded in respect of similar operating lease agreement, that the said agreement was that of deemed sale. The question is answered in favour of the appellant holding that operating lease agreement is squarely a case of deemed sale as per Article 366 (29A) (d) of the Constitution of India. Whether the service tax is leviable on the charges collected by the appellant towards Fleet Management Service, as part of the lease rent should be subjected to service tax? - HELD THAT - Undisputedly appellant before was not paying service tax in respect of these services, whereas in case of Arval India Pvt Ltd., bench had specifically noted that Arval was discharging service tax on these services provided by them. Counsel for the appellant has in his submissions admitted to liability to service tax on the said services - Taking note of the submissions made by the appellant the matter needs to be reconsidered by the original authority to determine the demand in respect of the charges recovered by the appellant towards providing of these services which form the part of lease rental. Hence matter to this extent needs to be remanded back to the original authority for re-determination of the demand after taking into account the submissions made by the appellant. Whether the demand is hit by the limitation as extended period of limitation cannot be invoked in the present case? - HELD THAT - Taking note of the fact that appellants had been discharging the VAT on the transactions undertaken by them in terms of the operating lease agreements, appellant was under genuine and bonafide belief that they are discharging the tax on the transactions undertaken by them. In view of such a bonafide belief, whereby appellants were discharging the VAT on these transactions which was much higher than the tax that could have been demanded treating these transactions to taxable under the category of rent a cab services, the extended period of limitation cannot be invoked. Whether any penalties under Section 76, 77 or 78 be imposed on the appellant? - HELD THAT - Since extended period of limitation cannot be invoked, penalty imposed under Section 78 cannot be sustained in view of the decision of the Hon ble Apex Court in case of UNION OF INDIA VERSUS M/S RAJASTHAN SPINNING WEAVING MILLS AND COMMISSIONER OF CUSTOMS AND CENTRAL EXCISE VERSUS M/S. LANCO INDUSTRIES LTD. 2009 (5) TMI 15 - SUPREME COURT - In respect of the penalties imposed under Section 76 and 77 and for invocation of the Section 80 of the Finance Act, 1994, no pronouncement at this stage and the same needs to be considered by the Commissioner in the remand proceedings while determining the service tax demandable. Appeal allowed in part and part matter on remand.
Issues Involved:
1. Classification of the service as "Rent-a-Cab Scheme Operator" or "Deemed Sale". 2. Levy of service tax on Fleet Management Services. 3. Applicability of the extended period of limitation. 4. Imposition of penalties under Sections 76, 77, and 78 of the Finance Act, 1994. Detailed Analysis: 1. Classification of the Service: The primary issue was whether the operating lease agreements entered into by the appellant with their clients constituted "deemed sale" under Article 366(29A)(d) of the Constitution of India, subject to sales tax/VAT, or if they fell under the definition of "rent-a-cab scheme operator" service, taxable under Section 65(105)(o) of the Finance Act, 1994. The Tribunal analyzed the lease agreements and concluded that the agreements satisfied the criteria laid down by the Hon'ble Apex Court in the BSNL case, indicating a "deemed sale". The Tribunal noted that the agreements provided the lessee with the right to use the vehicles without interference from the lessor, fulfilling the conditions for a deemed sale. 2. Levy of Service Tax on Fleet Management Services: The Tribunal acknowledged that the appellant was not paying service tax on Fleet Management Services, insurance, and maintenance services, which were part of the lease rental. The appellant admitted liability for service tax on these services. Consequently, the Tribunal remanded the matter to the original authority for re-determination of the demand concerning the charges collected for these services. 3. Applicability of Extended Period of Limitation: The Tribunal examined whether the extended period of limitation could be invoked. It was found that except for the first show cause notice, all other notices were issued within the normal period of limitation. The Tribunal held that the appellant had a bona fide belief that they were discharging VAT on the transactions, which was higher than the service tax. Hence, the extended period of limitation could not be invoked. 4. Imposition of Penalties: The Tribunal ruled that since the extended period of limitation could not be invoked, the penalty under Section 78 could not be sustained, referencing the Hon'ble Apex Court's decision in the Rajasthan Spinning and Weaving Mills case. Regarding penalties under Sections 76 and 77, the Tribunal directed the original authority to reconsider these penalties during the remand proceedings while determining the service tax demand. Summary of Findings: - The operating lease agreements were classified as "deemed sale" under Article 366(29A)(d) of the Constitution of India. - The matter of service tax on Fleet Management Services was remanded to the original authority for re-quantification. - The extended period of limitation could not be invoked, and the penalty under Section 78 was not sustained. - Penalties under Sections 76 and 77 were to be reconsidered by the original authority during the remand proceedings. Conclusion: The appeals were partially allowed, and the matter was remanded to the original authority for re-quantification of demand, interest, and penalties. The appeal filed by the Revenue was dismissed, and the cross objections filed by the appellant were disposed of. The original authority was instructed to decide the matter within three months, with full cooperation from the appellant.
|
