2018 (2) TMI 237 - AT - Service Tax

Rent-a-cab operator service - activity of providing buses on hire/rent on casual contract basis - case of the department is that this activity of the appellant was allegedly covered by the definition of taxable service, namely, Rent-a-Cab Operator Service as defined under Section 65(105)(o) of Finance Act, 1994 - Held that - it is observed that the appellant M/s MSRTC is not handing over the buses on long time running agreement whereas the ownership of buses is retained by the appellant and they are providing the buses on KM basis for a particular destination as per the choice of the passengers. There is no person involved as a recipient of a Rent-a-Cab service to whom the buses is handed over under a rent agreement. Therefore, in this fact arrangement of providing the buses for a particular journey on KM basis does not fall under the category of Rent-a-Cab Operator Service. The issue is squarely covered by the decision in the case of Shree Gayatri Tourist Bus Service Vs. Commissioner of Central Excise, Vadodara 2012 (5) TMI 126 - CESTAT, AHMEDABAD LB , where it was held that the services rendered by the assessee cannot fall under the category of Rent-a-Cab services, as per the definition enshrined in Section 65(91) of the Finance Act, 1994. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the activity of providing buses on hire/rent on a casual contract basis by the appellant falls under the definition of taxable service, Rent-a-Cab Operator Service.
2. Whether the appellant is liable for Service Tax for the period October 2008 to December 2009.
3. Whether penalties under Section 76, 77 & 78 were correctly imposed on the appellant.
4. Whether the appellant's appeal before the Commissioner (Appeals) was rightly rejected.

Analysis:
1. The appellant, Maharashtra State Road Transport Corporation (MSRTC), provided buses on a per kilometer basis, retaining control over the vehicles, drivers, staff, and fuel. The appellant argued that their service was that of a stage carrier, not a Rent-a-Cab, as they arranged services for fixed amounts on a KM basis. The appellant highlighted the inconsistency in the Department's classification of their service, citing precedents like Shree Gayatri Tourist Bus Service and Kuldip Singh Gill to support their argument.

2. The Revenue contended that MSRTC's service fell under Rent-a-Cab service, making them liable for Service Tax. They referred to the Tribunal's judgment in S.K. Kareemun, upheld by the Supreme Court in M. Venkata Reddy, to support their position.

3. Upon review, the Tribunal observed that MSRTC did not hand over buses under a rent agreement but provided them on a KM basis for specific journeys chosen by passengers, retaining ownership. The Tribunal found no recipient of Rent-a-Cab service in this arrangement, aligning with the precedent set by Shree Gayatri Tourist Bus. The judgment clarified the possession and hiring out of vehicles, distinguishing them from Rent-a-Cab services.

4. In conclusion, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant, MSRTC. The judgment emphasized the distinction between the appellant's service as a stage carrier and not falling under Rent-a-Cab Operator Service, as per the legal provisions and precedents cited during the proceedings.