2018 (11) TMI 1391 - AT - Service Tax

Rent a cab service - Revenue has compared their balance sheet income with the value reported in the ST-3 returns and demanded duty on difference - benefit of abatement denied on the ground that they are not tour operators - Held that - The appellants have not given any legal backing to the claim that the cars provided by them to other operator cannot be treated as rent a cab service provided by them to other operator. In the case of Trinity Travels 2016 (2) TMI 770 - CESTAT BANGALORE , relied by the appellant, it is seen that in that case, the assessee vehicle only used by another operator. In the said case, the only ground on which the demand was made was that the other operators who had used the cars of the appellant in the case for providing rent a cab service have not discharged the tax. In the instant case, however, the demand under rent a cab service is raised against the appellant themselves. Thus, the said case is not applicable to the facts in the instant case. Further, In view of the clarification of CBEC circular F. No. B-43/7/97/TRU, dated 11.07.1997, it is not open to Revenue to demand Service Tax in a situation where another rent a cab operator has paid service tax on same transaction. The appellant have produced certificates from other tour operators who have used their vehicles. These certificates cannot replace the evidence. The matter is remanded to examine the case in the light of CBEC circular F. No. B-43/7/97/TRU, dated 11.07.1997 - appeal allowed by way of remand.

Summary

Issues:
Appeal against demand of Service Tax, interest, and penalty for rent a cab service; Discrepancy between balance sheet income and ST-3 returns; Denial of abatement benefit; Interpretation of rent a cab service liability; Legal backing for claim; CBEC circular clarification on service tax liability; Requirement of evidence for tax discharge by other operators; Demand based on accrual vs. receipt basis; Consideration of notification 09/2004-ST benefit.

Analysis:
The appellant, engaged in rent a cab service, challenged the demand of Service Tax, interest, and penalty due to a discrepancy between balance sheet income and ST-3 returns. The appellant argued that most of the amount received was for providing cabs to other operators who, in turn, offered rent a cab service to customers. They contended that these operators had already paid tax on the amount received from customers. The appellant also claimed entitlement to abatement under notification 09/2004 for rent a cab service. They emphasized that Service Tax should be levied based on actual revenue received, not on accrual basis.

The respondent, however, supported the impugned order, noting that the appellant admitted liability for paying Service Tax on certain amounts despite claiming deductions. The Tribunal analyzed the legal aspects and found that the appellant failed to provide sufficient legal backing for their claim that the cars provided to other operators should not be considered as rent a cab service provided by them. The Tribunal distinguished the case from precedents cited by the appellant, highlighting the need for evidence to support tax discharge by other operators.

Referring to a CBEC circular, the Tribunal clarified that Service Tax cannot be demanded if another rent a cab operator has already paid tax on the same transaction. The Tribunal emphasized the importance of evidence to prove tax discharge by other operators, stating that certificates provided by them were insufficient. Consequently, the Tribunal set aside the impugned order and remanded the matter for further examination in light of the CBEC circular and the need for evidence regarding tax discharge by other operators.

The Tribunal directed the original Adjudicating Authority to consider the appellant's claim regarding tax liability, particularly focusing on the receipt basis for Service Tax calculation and the potential benefit under notification 09/2004-ST. The appeal was allowed for remand to the original adjudicating authority for fresh orders, incorporating the observations made during the analysis.