2018 (9) TMI 757 - AT - Service Tax

Rent a Cab Service - Revenue entertained a view that the activity of providing vehicles to another person on monthly leasing rent also amounts to providing Rent a Cab Service‟ and as such demands were raised against the appellant for the period 2008-09 and 2011-12, by way of issuance of a show cause notice dated 21/03/2013 - Boards clarification issued vide F.No.B-43/7/97-TRU dated 11/07/1997 - Extended period of limitation. Held that - Board Circular does not make the legal issue very clear. There is no reference to the terms who , his and him . The clarification does not make it clear as to how and who has paid the service tax on which amount billed by whom - the appellant‟s providing motor vehicles to the other Rent a Cab‟ operator on leasing basis is also covered by the services falling under the category of Rent a Cab‟ and tax liability would arise against him. Extended period of limitation - Held that - As the issue is complicated issue of legal interpretation of provisions of law and there is no direct evidence on record to reflect upon any mala fide of the assessee, the longer period would not be available to the Revenue - demand restricted within the normal period of limitation. Appeal allowed in part.

Summary

Issues:
1. Whether providing vehicles on monthly leasing rent by a registered "Rent a Cab Service" operator amounts to providing "Rent a Cab Service" for the purpose of service tax liability.
2. Whether the demand raised against the appellant for the period 2008-09 and 2011-12, along with penalties and interest, is justified.
3. Whether the benefit of limitation and penalty should be extended to the appellant based on legal interpretation and absence of evidence of mala fide.

Analysis:

Issue 1:
The appellant, registered as a "Rent a Cab Service" operator, was found to be providing vehicles on monthly leasing rent to another "Rent a Cab" service provider. The Revenue contended that this activity also falls under "Rent a Cab Service," leading to demands for service tax. The appellant argued citing a Board clarification that no service tax is payable in such cases. However, the Tribunal, in a previous case, held that leasing vehicles to another Rent a Cab operator attracts service tax. The Tribunal upheld this decision, stating that the appellant's activity falls under the category of "Rent a Cab Service," leading to tax liability.

Issue 2:
The demand for service tax, penalties, and interest for the period 2008-09 and 2011-12 was confirmed by the lower authority. The Tribunal, while acknowledging the appellant's challenge on the point of limitation, restricted the demand within the normal period due to the absence of direct evidence of mala fide intent. The penalties were set aside, aligning with the legal interpretation of the provisions of law.

Issue 3:
Regarding the benefit of limitation and penalty extension, the Tribunal referred to a previous case where such benefits were granted. Considering the complexity of legal interpretation and the lack of evidence indicating mala fide actions by the appellant, the Tribunal decided not to allow the longer period of limitation to the Revenue. Consequently, the demand was restricted within the normal period, and penalties were entirely set aside.

In conclusion, the Tribunal dismissed the appeal, affirming the tax liability on providing vehicles on monthly leasing rent as falling under "Rent a Cab Service." The demand was restricted within the normal period, and penalties were waived due to the absence of evidence of mala fide intent.