2018 (12) TMI 1294 - AT - Service Tax

Extended period of limitation - Mis-match of amounts shown as income in the income tax amounts to the shown in service tax returns - Demand of Service tax - Held that - During the period in question 2003-2004, there were two views prevailing on the issue of whether consideration received for hiring out a taxi on kilometer basis is rent-a- cab services or otherwise. These two views has to be settled by the various higher judicial forums to come to a conclusion as to that the services and the consideration received by rent-a-cab services person is taxable even if it is hired out on the basis of kilometer - the impugned order to the extent it is contested in this case is set aside on ground of limitation - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Discrepancy in income tax and service tax returns
- Demand for tax, interest, and penalty
- Interpretation of services under Rent-a-Cab category
- Applicability of limitation period

Discrepancy in income tax and service tax returns:
The appeal was against Order-in-Appeal No. 18/2010 regarding a discrepancy in income tax and service tax returns. The appellant, registered for Rent-a-Cab services, had income mismatch in returns leading to a show cause notice for tax, interest, and penalties. The Adjudicating Authority confirmed the demands, upheld by the First Appellate Authority, except for the penalty under Section 76.

Interpretation of services under Rent-a-Cab category:
The appellant argued a bonafide belief that they were not renting cabs during 2003-2004, citing decisions supporting their view. They claimed the demand was time-barred, referring to a Tribunal decision. The Departmental Representative cited a High Court judgment supporting taxing vehicle hiring per kilometer under Rent-a-Cab services.

Applicability of limitation period:
The Tribunal noted conflicting views on taxing kilometer-based hiring during 2003-2004. Considering the appellant's small scale and bonafide belief, they applied the Supreme Court's judgment on limitation from Continental Foundation JT. Venture. Consequently, the impugned order was set aside on limitation grounds, and the appeal was allowed.

The judgment favored the Revenue on the interpretation of services under Rent-a-Cab category but sided with the appellant on the limitation issue due to conflicting views during the relevant period. The decision highlighted the importance of bonafide belief and the application of relevant judicial precedents in tax matters.