2019 (10) TMI 215 - AT - Service Tax

Rent-a-cab service - period from November 2003 to September 2007 - difference between renting and hiring which are interchangeable expressions - applicability of decision of the Hon'ble High Court of Allahabad in ANIL KUMAR AGNIHOTRI VERSUS COMMISSIONER, CENTAL EXCISE KANPUR 2018 (1) TMI 171 - ALLAHABAD HIGH COURT has held that there is no difference between renting and hiring which are interchangeable expressions and that hiring out, irrespective of the conditions attached thereto, sufficed for tax liability to be fastened. HELD THAT - In the dispute before the Hon'ble High Court of Allahabad, the outsourcing agreement incorporated both fixed charge for the threshold distance and variable charge for usage beyond the threshold and the appellant therein, pleading for exclusion from classification as provider of rent-a-cab service, claimed that the control of the cab did not pass on to the customer as the agreement was for hiring and not renting ; the Hon'ble High Court held that such distinction would not alter the nature of the agreement which was not sought to be decided upon on the basis of the determination of consideration - The facts and circumstances in which the decision of the Hon'ble High Court of Allahabad materially differs from the issues agitated now before us. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of service as 'rent-a-cab service' based on the purpose of vehicle hire and consideration.

Analysis:
The appeal challenges the order-in-appeal by the Commissioner of Central Excise & Service Tax, disputing the classification of services provided by M/s Raviraj Tours and Travels Ltd to M/s Spanco Telesystem & Solutions Ltd as 'rent-a-cab service'. The appellant argues that the transaction involved providing vehicles based on per kilometre usage, distinct from the lump sum payment consideration for vehicles placed at the recipient's disposal. The appellant cites various precedents, emphasizing the importance of the purpose of vehicle hire and consideration in determining the classification of services.

The Authorized Representative contends that the distinction between 'renting' and 'hiring' is immaterial for tax liability, citing the decision of the Hon'ble High Court of Allahabad. The appellant's argument is supported by precedents highlighting the significance of the purpose of vehicle hire and consideration in determining tax liability for 'rent-a-cab service'.

The decisions cited by the appellant consistently emphasize that the classification as 'rent-a-cab service' hinges on the purpose of vehicle hire and the consideration scheme. The Tribunal's decision in re Bangalore Metropolitan Transport Corpn clarifies the criteria for a rent-a-cab scheme operator and the nature of consideration involved, which is crucial in determining tax liability. The decision in re Rahul Travels further supports the interpretation that vehicles contracted out based on actual usage are not taxable under the relevant Finance Act provision.

The judgment acknowledges the variant decision in re Anil Kumar Agnihotri but distinguishes it from the current dispute based on the nature of the agreement and control over the vehicles. Given the similarities with previous judgments such as re R S Travels, re Sachin Malhotra, re Bangalore Metropolitan Transport Corpn, and re Rahul Travels, the Tribunal follows the same reasoning to set aside the impugned order and allow the appeal.