2019 (3) TMI 1099 - AT - Service Tax

Time limitation - Rent-a-cab operator service - appellant has been contending that their activity would not fall within the levy of service tax net as they were charging the customers on per kilometre basis and there was no renting of the vehicle involved - Held that - This issue has been mired in litigation for a long time and there are conflicting decisions also. Taking into account the fact that there are conflicting decisions on the issue as also the same being interpretational, the appellant cannot be saddled with the allegation of suppression of facts with intention to evade payment of service tax. Moreover, the Department has not produced any cogent evidence to show that there was a positive act of suppression on the part of the appellant. The entire demand has been raised on verification of accounts of the appellant. This shows that nothing was suppressed with any intent to evade payment of service tax - the Show Cause Notice is time-barred - appellant succeeds on the ground of limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the demand of service tax under the category of "Rent-a-Cab Operator Services" is sustainable?
2. Whether the demand is time-barred due to the ground of limitation?
3. Whether the penalties imposed under Sections 76 and 77 are sustainable?
4. Whether the penalty imposed under Section 78 of the Finance Act, 1994 is justifiable?

Analysis:

Issue 1:
The appellant contended that their activity did not fall under the levy of service tax as they operated cars on a per kilometre basis without renting the vehicles. The appellant argued that the activity, if any, would be categorized as hiring of vehicles, not renting, citing legal precedents. The Tribunal considered conflicting decisions and held that the appellant cannot be accused of suppressing facts to evade service tax payment, as the Show Cause Notice was time-barred. The Tribunal found that the demand for service tax under the category of "Rent-a-Cab Operator Services" was not sustainable due to the ground of limitation.

Issue 2:
The appellant raised the issue of limitation, arguing that the Show Cause Notice issued for the period from April 2005 to September 2006 was time-barred. The appellant claimed that they did not pay service tax as they believed their activity did not fall within the service tax category. The Tribunal agreed with the appellant, holding that the entire demand was time-barred, and thus, the appellant succeeded on the ground of limitation.

Issue 3:
Regarding the penalties imposed under Sections 76 and 77 of the Finance Act, 1994, the Commissioner (Appeals) set aside these penalties. The appellant argued that the penalty imposed under Section 78 was excessive and not sustainable. The Tribunal did not delve into the merits of this issue as the appeal was allowed on the ground of limitation.

Issue 4:
The respondent supported the findings that the appellant's activity fell within Rent-a-Cab Services, citing legal precedents. However, the Tribunal did not address the merits of this argument due to the favorable ruling on the ground of limitation. The impugned Order was set aside solely on the ground of limitation, and the appeal was allowed with consequential reliefs.

This detailed analysis of the judgment showcases the legal arguments, precedents cited, and the Tribunal's reasoning for each issue involved in the case.