2008 (8) TMI 298 - AT - Service Tax

Appellant submit that the vehicle is hired from one destination to another destination and charged on the basis of metre reading. Therefore they do not come strictly within the ambit of rent a cab operator - Prima facie we find that a vehicle run on a meter basis cannot be brought under the category of Rent a Cab Operator as the vehicle is not rented out or hired on specific contract basis - appellants have made out a strong case in their favour in terms of the judgments of tribunal in the case of Kuldip Singh Gill - stay granted

Summary

Issues:
1. Whether the appellants fall under the category of "Rent a Cab" Operator and are liable for service tax?
2. Interpretation of the term "Rent a Cab Operator" in relation to the operation of vehicles on a meter basis.
3. Applicability of previous judgments in determining the liability for service tax.

Analysis:

1. The appellants were categorized as "Rent a Cab" Operators and were charged with service tax amounting to Rs. 29,86,285. However, they contested this classification, claiming that they did not rent out their cabs but operated them based on meter readings from one destination to another. They argued that this mode of operation did not strictly align with the definition of a "rent a cab operator." Citing a judgment in a similar case, the appellants asserted that running a cab on a meter basis does not constitute renting out a vehicle.

2. The Departmental Representative opposed the appellants' argument by referring to another judgment which stated that there is no distinction between rent and hire under the Motor Vehicles Act. The representative contended that the operation of the vehicle on a meter basis still falls under the purview of hiring, thereby making the appellants liable for service tax. However, the appellants maintained that they do not hire out the vehicle but charge based on meter readings, distinguishing their case from traditional hiring practices.

3. The Tribunal carefully evaluated the submissions and observed that a vehicle operated on a meter basis does not fit the definition of a "Rent a Cab Operator" since the vehicle is not rented out or hired under a specific contract. Relying on the judgments cited by the appellants, the Tribunal found merit in their argument and granted a stay application, waiving the pre-deposit and halting the recovery process. The Tribunal scheduled the matter for final hearing, acknowledging that the issue was prima facie in favor of the appellants based on the interpretations provided by the previous judgments.

This detailed analysis of the judgment highlights the key issues raised, the arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant legal principles and precedents.