2017 (4) TMI 1088 - AT - Service Tax

Rent-a-cab operator service - principles of natural justice - case of Revenue is that adjudicating authority has not properly appreciated the facts in dropping the demand - Held that - unsupported factual assertions have been made by the Commissioner (Appeals) like placing the cabs at the disposal of the clients and passing the effective control to the clients. There is no basis for such assertion - the decision of the Tribunal in R.S. Travels 2008 (7) TMI 27 - CESTAT NEW DELHI is squarely applicable to the present case, where it was held that point has to be decided by the lower authority after ascertaining the facts, for which, this matter has to be remanded to Commissioner for de novo adjudication - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Tax liability under "rent-a-cab operator service" for providing motor vehicles on hire basis.
2. Applicability of Tribunal's decision in R.S. Travels.
3. Interpretation of the nature of hiring out vehicles to determine tax liability.

Analysis:
1. The case involved a dispute regarding tax liability under the category of "rent-a-cab operator service" for providing motor vehicles on hire basis. The Tribunal remanded the matter to the Original Authority to decide the case afresh following the principles of natural justice and to examine the question of time bar and the ratio of the decision in R.S. Travels.

2. The Original Authority held that the appellant's case was not covered under the "rent-a-cab operator service" as the vehicles were provided to clients on demand for traveling from one place to another and charged on a per kilometer basis. The bills raised by the appellant supported this argument. The Revenue appealed against this decision, but the Commissioner (Appeals) reversed the decision, stating that the nature of hiring out vehicles determined the tax liability, not the method of charging rent.

3. The appellant argued that the decision in R.S. Travels was applicable to their case, as upheld by the Hon'ble Uttrakhand High Court. They contended that the lower authorities erred in stating that the appellants placed taxis at the disposal of clients, emphasizing that transportation was provided based on distance traveled. The Tribunal found that the Commissioner (Appeals) made unsupported factual assertions and reversed the decision based on grounds that lacked merit. The Tribunal upheld the Original Authority's findings, stating that the decision in R.S. Travels was applicable, and set aside the impugned order, allowing the appeal.

This judgment highlights the importance of interpreting the nature of services provided to determine tax liability under specific categories and emphasizes the significance of following established legal principles and precedents in tax disputes.