2018 (8) TMI 1339 - AT - Service Tax

Rent-a-cab service - non-payment of service tax on lease rentals - CENVAT credit - input services utilized both in providing taxable and exempted services - Rule 6(3) of the Cenvat Credit Rules, 2004. Held that - The issue of taxability of said service is now pending before the Hon ble Delhi High Court. Once the said issue is determined, the present issue would be settled accordingly - the matter be remanded to the adjudicating authority to decide the present issue depending on the outcome of the writ petition pending before the Hon ble Delhi High Court. Appeal allowed by way of remand.

Summary

Issues:
1. Taxability of lease rental service as rent-a-cab service.
2. Recovery of service tax under Rule 6(3) of the Cenvat Credit Rules, 2004 for input services utilized in both taxable and exempted services.

Issue 1: Taxability of Lease Rental Service
The appellant provided fleet management and lease rental services during 2006-07 to 2010-11. A demand notice was issued for recovery of service tax on lease rental service, treating it as rent-a-cab service. The appellant claimed exemption for lease rental service, leading to a demand for service tax. The Commissioner confirmed this demand, prompting the appellant to challenge it in the Hon’ble Delhi High Court. The appellant argued that resolving the taxability issue of lease rental service would automatically resolve the demand under Rule 6(3) of the Cenvat Credit Rules, 2004. The Revenue did not contest that the issue of taxability was pending before the High Court. It was agreed to remand the matter to the adjudicating authority based on the High Court's decision. Consequently, the impugned order was set aside, and the appeal was remanded for further consideration post the High Court's judgment.

Issue 2: Recovery of Service Tax Under Rule 6(3) of the Cenvat Credit Rules
The appellant faced a show cause notice for non-reversal of cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004, for the period of 2006-07 to 2010-11. This notice was related to the utilization of common input services in providing both taxable and exempted services. The parties agreed that the resolution of the taxability issue of lease rental service before the Hon’ble Delhi High Court would impact the decision on this matter. The Tribunal decided to remand the case to the adjudicating authority to determine the issue post the High Court's judgment in the writ petition filed by the appellant. The appeal was allowed by way of remand, awaiting the High Court's decision for further proceedings.

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