2018 (11) TMI 620 - AT - Service Tax

Rent-a- Cab Operator Service - benefit of abatement under N/N. 1/2006-ST - SSI Exemption - Held that - On allowing said abatement in none of the financial years from 2008-09 onwards during the period covered by these appeals none of the appellants crossed permissible limit for exemption under said Notification No. 06/2005 and, therefore, they were not liable to pay service tax during the period covered by these appeals - Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
Interpretation of service tax liability for providing vehicles to M/s UPSRTC under 'Rent-a-Cab Operator Service'; Applicability of abatement under Notification No.1/2006-ST and exemption for small scale under Notification No.06/2005-ST; Assessment of penalties imposed by the Original Authority and Commissioner (Appeals).

Interpretation of service tax liability:
The appellants provided vehicles to M/s UPSRTC, prompting the Revenue to investigate the payments made and issue show cause notices for service tax demand under the Finance Act, 1994. The contention was whether the arrangement constituted 'Rent-a-Cab Operator Service'. The Original Authority upheld the demand, leading to appeals before the Commissioner (Appeals) who reduced penalties but affirmed the demand. The Tribunal analyzed the situation and found that the arrangement did not fall under 'rent-a-cab operator service', leading to the setting aside of all impugned orders and allowing the appeals.

Abatement under Notification No.1/2006-ST and exemption under Notification No.06/2005-ST:
The appellants argued for abatement under Notification No.1/2006-ST at 60% and exemption for small scale under Notification No.06/2005-ST. The Tribunal referred to a previous case where it was held that the exemption limit for small scale under Notification No.06/2005-ST should be examined after allowing the abatement. It was determined that none of the appellants exceeded the permissible limit for exemption under the said notification, absolving them from the liability to pay service tax during the relevant period covered by the appeals.

Assessment of penalties:
The Original Authority and Commissioner (Appeals) imposed penalties on the appellants, which were reduced by the Commissioner (Appeals) but not entirely overturned. However, the Tribunal's decision to set aside the impugned orders and allow the appeals with consequential relief in accordance with the law indicates a favorable outcome for the appellants in terms of penalties as well.

In conclusion, the judgment by the Appellate Tribunal CESTAT ALLAHABAD addressed the issues surrounding the interpretation of service tax liability, the applicability of abatement and exemption notifications, and the assessment of penalties in the context of providing vehicles to M/s UPSRTC. The Tribunal's decision favored the appellants by ruling that the arrangement did not constitute 'rent-a-cab operator service', absolving them from the service tax liability and penalties imposed by the authorities.