2018 (1) TMI 215 - AT - Service Tax

Rent-a-cab service - business of running of radio taxies and are providing transport services to both individual and corporate customers - scope of the term renting and hiring - whether the service would be taxable under the head Rent-a-Cab-Scheme Operator s Service or not? - Held that - The admitted facts of the case are that the respondent is providing various vehicles for transport of people. In respect of such transport for individual passengers for which consideration was received on the spot by the driver of the said vehicle, no service tax liability arises. This position is not in dispute. Service to corporate clients - Held that - services provided by the noticee being transportation of passenger from one point to another against specific call/request rather than to make available the vehicle for a particular time span, where possession and control of vehicle always lie with the noticee or driver, cannot be taxed under rent-a-cab service by no stretch of imagination irrespective of charges per trip are fixed amount instead of per KM basis. - The Tribunal in APSRTC ADDAPA 2017 (11) TMI 773 - CESTAT HYDERABAD held that when the contract is to hire a vehicle, there is no renting of cab. Appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of service tax liability for transport services provided by a company under the category of "Rent-a-Cab-Scheme Operator's Service."

Analysis:
The judgment revolves around the interpretation of service tax liability concerning transport services provided by a company categorized as "Rent-a-Cab-Scheme Operator's Service." The dispute arose when the Revenue challenged the dropping of demand proceedings against the company by the Commissioner of Service Tax, New Delhi. The demand proceedings were initiated to recover service tax amounting to a specific sum for a defined period. The company was engaged in providing transport services, particularly running "radio taxies" for both individual and corporate customers. The Revenue contended that services provided to corporate clients, where bills were raised periodically instead of on the spot, should be taxed under the rent-a-cab-service category.

The original authority, after examining the terms of agreements with corporate clients and relevant legal provisions, concluded that the services provided did not fall under the rent-a-cab-service category. The authority emphasized that the nature of services was not dependent on billing methods but on the actual service provided. The Commissioner also relied on previous cases to support this finding.

The Revenue, in its appeal, argued that the services provided to corporate clients differed from those offered to individual customers and should be taxed under rent-a-cab-service. The company retained control of the vehicles and was responsible for their maintenance, further supporting the argument against tax liability under the rent-a-cab-service category.

The judgment referenced various tribunal and high court decisions to analyze similar cases and determine the crucial element of control over the vehicle in deciding tax liability. Ultimately, the tribunal found no reason to interfere with the impugned order, dismissing the Revenue's appeal.

In conclusion, the judgment provides a detailed analysis of the service tax liability concerning transport services provided by the company, emphasizing the nature of services provided and the control over the vehicles as key factors in determining tax liability under the rent-a-cab-service category.