2018 (3) TMI 418 - AT - Service Tax

Classification of services - rent-a-cab services or otherwise - whether the activity of providing cab to other travel agents for rendering services to foreign tourist would fall under the definition of rent-a-cab service? - Held that - The definition of rent-a-cab scheme operator as under section 65(91) is any person engaged in the business of renting of cabs. The facts reveal that the appellant was collecting hire charges - The issue whether hiring of vehicles would fall under definition of rent-a-cab service has been decided in the case of Sachin Malhotra 2014 (10) TMI 816 - UTTARAKHAND HIGH COURT , where it was held that unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under Section 65(105)(o), read with Section 65(91) of the Service Tax Act. Appeal allowed - decided in favor of appellant.

Summary

Issues: Whether the activity of providing cab services to travel agents falls under the definition of rent-a-cab service, and whether the demand for service tax on the appellant is sustainable.

Analysis:
1. Issue of Rent-a-Cab Service Definition: The appellant argued that they did not provide rent-a-cab services as defined under section 65(91) of the Finance Act. They contended that to qualify as a rent-a-cab service, the control of the cab/vehicle should be handed over to the person hiring it. The appellant maintained that they always retained control of the vehicles, which were mainly used by travel agents for foreign tourists' trips. The appellant's vehicles were operated on a kilometer basis, always driven by their drivers, and under their control. Citing case laws, the appellant asserted that they only provided transport services, not rent-a-cab services.

2. Limitation Issue: The appellant also raised the limitation issue, arguing that the period up to 2007 was time-barred due to an earlier dropped Show Cause Notice in 2005. They contended that there was no suppression of facts or misstatement, thus challenging the sustainability of the allegation.

3. Department's Argument: The department, represented by the ld. AR, supported the findings in the impugned order. Referring to a decision by the Hon'ble High Court of Gujarat in a similar case, the department argued that the issue had been decided in their favor previously. They highlighted that the decision by the Hon'ble High Court of Uttarakhand in a related case failed to consider the Gujarat High Court's decision, which they believed should apply to the present case.

4. Tribunal's Decision: After hearing both sides, the Tribunal deliberated on whether providing cabs to travel agents for foreign tourists constituted rent-a-cab services. Citing previous judgments and analyzing the concept of renting versus hiring, the Tribunal concluded that the appellant's activity of collecting hire charges from other travel agents amounted to renting of vehicles, falling under the definition of rent-a-cab service. Relying on precedents and their own decision, the Tribunal held that the demand for service tax could not be sustained. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief.

In conclusion, the Tribunal's decision revolved around interpreting the definition of rent-a-cab service and analyzing the nature of the appellant's activities in providing cab services to travel agents. The judgment emphasized legal precedents and the distinction between renting and hiring vehicles to determine the tax liability of the appellant.