2019 (2) TMI 1030 - AT - Service Tax

Rent-a-cab service - Mis-declaration of value - It was alleged by the department that the appellant had not declared the correct taxable value of rent a cab service as they had been providing cab on higher basis to West Central Railway Zone as well as Indian Army and the value of services provided to these organizations were not included in the taxable value by the appellant for the period 2001-2002 to 2004-2005 - Held that - The appellant has failed to prove that the receipts in the balance sheet and profit and loss account are accountable for activity of rent a cab service. We find that the appellant has been changing its stand before various authorities in an attempt to get out of the service tax liability. At one stage they argued that they did not own the required number of vehicles for providing rent a cab service and were providing cars only on commission basis. The appellant has in fact received the payment in lieu of providing the rent a cab service in the form of Indian currency. Payment has been received in convertible foreign exchange by the main service provider namely, Ess Dee Travel Express Pvt. Ltd. and not by the appellant - the benefit of Notification 21/2003-ST dated 20 November 2003 cannot be extended to the appellant as a plain reading of the notification indicate that exemption will be available to persons who receive payment in the convertible foreign exchange. This apart, the benefit of the notification may have been availed of by M/s Ess Dee Travels Express Pvt. Ltd. Demand upheld - appeal dismissed - decided against appellant.

Issues:
1. Allegation of incorrect declaration of taxable value of rent a cab service.
2. Challenge against order-in-originals before Commissioner (Appeals).
3. Tribunal's order for de novo examination based on R.S. Travels case.
4. Confirmation of service tax and penalty by Adjudicating Authority.
5. Appeal against Commissioner (Appeals) decision.
6. Dispute regarding taxable value calculation and foreign exchange payments.
7. Interpretation of relevant provisions on Rent-A-Cab service.
8. Failure to prove accountability for rent a cab service activity.
9. Contrary views on tax liability in renting and hiring services.
10. Conclusion on service tax liability and foreign exchange payments.

Analysis:

1. The appellant faced allegations of not declaring the correct taxable value of rent a cab service provided to West Central Railway Zone and Indian Army. The department issued show cause notices leading to adjudication by the Competent Authority, resulting in confirmed service tax amounts and penalties.

2. The appellant challenged the order-in-originals before the Commissioner (Appeals), who upheld the levy of service tax and penalties. Subsequently, appeals were filed before the Tribunal against the Commissioner's decisions.

3. The Tribunal ordered a fresh examination of the matter based on the R.S. Travels case observations, emphasizing the need to re-examine the issue on legal grounds. This decision was influenced by the interpretation of Rent-a-cab service operators' activities and the distinction between renting and hiring services.

4. The Adjudicating Authority confirmed the service tax amount and penalties, which were challenged before the Commissioner (Appeals) and subsequently appealed to the Tribunal. The Commissioner's decision was upheld, leading to further appeal by the appellant.

5. The appellant contended that the department's case relied solely on figures from financial statements without proper documentary evidence. They argued for the exclusion of payments received in foreign exchange under Notification No. 21/2003-ST to reduce taxable receipts.

6. The Tribunal analyzed the appellant's activities in renting cars to the railway zone and army establishments, finding discrepancies in the appellant's claims and failure to discharge service tax liability. The interpretation of relevant provisions and case laws supported the conclusion of tax liability on rent-a-cab services.

7. The Tribunal dismissed the appeal, emphasizing that the appellant failed to prove entitlement to the Notification benefits due to payments received in Indian currency, not convertible foreign exchange. The decision highlighted the importance of meeting specific criteria for exemption under relevant notifications.

8. In conclusion, the Tribunal upheld the service tax liability on the appellant's rent-a-cab services, rejecting their claims regarding foreign exchange payments and notification benefits. The decision was based on a detailed analysis of the appellant's activities and legal provisions governing rent-a-cab services.

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