2017 (4) TMI 854 - AT - Service Tax

100% EOU - Rent-a-Cab service - buses used by the appellant for transportation of employees of their customers from the residential premises to workplace and vice-a-versa - Held that - the issue is now squarely covered by the decision of the Hon ble High Court of Uttarakhand in the case of Commissioner, Customs And Central Excise, Meerut-I Versus M/s. RS. Travels 2014 (10) TMI 817 - UTTARAKHAND HIGH COURT , where it was held that when there is only a contract of hire and there is no renting of the cab, there is no question of the assessee being assessed in respect of services rendered in connection with rent a-cab as there is no renting at all - the service recipient of the appellant, who is a 100% EOU, benefit of non-payment of service tax or refund of the service tax paid, can be claimed by the 100% EOU, this is a revenue neutral situation - appeal allowed - decided in favor of assessee.

Summary

Issues:
1. Whether the service rendered by the appellant during a specific period is liable for tax under the category of 'Rent-a-Cab' service or not.

Analysis:
The appeal was filed against an Order-in-Original passed by the Commissioner of Central Excise, Mumbai, regarding the tax liability of the appellant's service from April 2004 to September 2006. The main issue was whether the service provided by the appellant, involving transportation of customers' employees, falls under the 'Rent-a-Cab' service category. The adjudicating authority concluded that the service is taxable under 'Rent-a-Cab Service' as the vehicles were under the effective control of the customer.

The appellant argued that their activity was vehicle hiring, not renting, citing relevant legal precedents such as decisions from the Hon'ble High Court of Uttarakhand and Tribunal cases. Additionally, the appellant highlighted that the service tax demand was related to services provided to 100% Export Oriented Units (EOU) and referenced CBEC circulars and tribunal judgments supporting their position. The Authorized Representative supported the lower authorities' findings.

Upon reviewing the records, the Tribunal found that the tax demand was based solely on categorizing the vehicles as 'Rent-a-Cab Service.' It was noted that the vehicles were operated by drivers appointed by the appellant for transporting customers' employees. The Tribunal agreed with the appellant's argument, supported by legal precedents, that the issue was akin to the decisions of the Hon'ble High Court of Uttarakhand. Furthermore, considering the customers being 100% EOU, the Tribunal concluded that any tax liability was revenue-neutral, supporting the appellant's position with reference to relevant tribunal decisions.

Ultimately, the Tribunal held that the impugned order was unsustainable and set it aside, allowing the appeal in favor of the appellant. The decision was based on the lack of sustainability of the tax demand under the 'Rent-a-Cab Service' category and the neutral tax liability in the context of 100% EOU customers.