2009 (3) TMI 118 - AT - Service Tax

Rent-a-Cab service - providing vehicles, namely Indica/ Qualis with driver for transport purposes and taking the vehicles back after completion of journey to specific destination Held that where the vehicle was used for a particular destination on the demand of client, it cannot be treated as Rent-a-Cab and it will be Tour Operator Service Demand is not sustainable.

Summary

Issues:
Interpretation of Rent-a-Cab service vs. Tour Operator Service

Analysis:
The case involved an appeal by the Revenue against an Order-in-Appeal passed by the Commissioner (Appeals), Delhi. The dispute centered around whether the service provided by the respondents, involving providing vehicles with drivers to a client for specific destinations, constituted Rent-a-Cab service or Tour Operator Service. The original authority had imposed tax demands and penalties on the respondents, which were set aside by the Commissioner (Appeals), leading to the Revenue's appeal.

The Revenue argued that the respondents were providing Rent-a-Cab service as they provided vehicles to the client, who had control over the vehicles during the journey. The Revenue relied on a previous decision in R.S. Travels v. CCE to support their argument. On the other hand, the respondent's representative, a Chartered Accountant, reiterated the findings of the Commissioner (Appeals) stating that the vehicles were used for fixed destinations by the client, making it outside the scope of Rent-a-Cab service.

After considering the arguments from both sides, the Tribunal referred to the decision in R.S. Travels case, emphasizing that if a vehicle is used for a specific destination at the client's demand, it should be considered Tour Operator Service rather than Rent-a-Cab service. The Tribunal noted that the Commissioner (Appeals) correctly determined that the respondents provided vehicles with drivers for specific destinations, making the case law cited by the Revenue inapplicable. Consequently, the Tribunal upheld the decision of the Commissioner (Appeals) and rejected the appeal filed by the Revenue.

In conclusion, the judgment clarified the distinction between Rent-a-Cab service and Tour Operator Service based on the specific usage of vehicles for designated destinations at the client's request. The decision highlighted the importance of the nature of service provided in determining the appropriate categorization under the relevant laws and case precedents.