2018 (2) TMI 1411 - AT - Service Tax

Levy of service tax - rent a-cab services - Held that - it appears that w.e.f. 16/10/1998, the definition of rent a cab scheme operator means any person engaged in the business operating cab on rent basis - In the instant case, the learned Counsel was unable to show any contract with the user. Time limitation - Held that - the appellant had not disclosed the value of remunerated amount that they are not discharging/paying service tax on the remunerated amount to the department despite clear provisions of law on the issue, it is proved beyond any doubt that they had suppressed this fact from the department, with intent to evade payment of service, as providing of taxable service was remain unearthed if searches premises of the appellant was not conducted by the department - extended period rightly invoked. Penalty u/s 80 - Held that - full service tax liability with interest has been paid before issue of demand notice - penalty waived by invoking section 80. Appeal allowed in part.

Summary

Issues:
1. Classification of services provided by the appellant as rent-a-cab operator or transport service.
2. Interpretation of the limitation period for the demand of service tax.
3. Applicability of penalty under Section 80.

Classification of Services:
The appellant, engaged in rent-a-cab services, challenged the levy of service tax based on per kilometer charges for vehicles hired out to customers. The Counsel argued that the services were merely transportation on hire basis, citing relevant case laws. However, the Tribunal noted the lack of evidence showing a contract with users and the control of vehicles remaining with the appellant. The Tribunal upheld the service tax levy, classifying the services as rent-a-cab operator under the Finance Act, 1994.

Interpretation of Limitation Period:
Regarding the limitation period for the demand of service tax, the Tribunal found the appellant had not disclosed the remunerated amount to evade payment, leading to the application of the extended period provisions. The Tribunal held that the appellant deliberately attempted to escape duty payment, justifying the demand within the extended period.

Applicability of Penalty under Section 80:
While the appeals were deemed devoid of merit, the Counsel requested a waiver of penalty under Section 80, citing full payment of service tax liability with interest before the demand notice. Considering this, the Tribunal waived the penalties, partially allowing the appeals filed by the appellant.

In conclusion, the Tribunal upheld the classification of services as rent-a-cab operator, interpreted the limitation period for service tax demand, and waived penalties under Section 80 based on the appellant's payment of service tax liability with interest.