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2020 (9) TMI 791 - AT - Service TaxRent-a-cab service - appellant is providing several numbers of vehicles to BSNL etc. on monthly basis against considerations - it was alleged that M/s AHT T despite providing taxable services to various customers and realizing the values of the said services, did not disclose the same to the department and thereby have deliberately suppressed the material facts with intent to evade payment of service tax - HELD THAT - It cannot be disputed that both in renting and licensing , de facto possession of the thing is enjoyed. Difference is well carved out under the law wherein both, de jure possession and control is given, but in renting , it is right-in-rem whereas in licensing , it is right-in-persona. When rent-a-cab scheme operator gives the car on rent, de facto possession is, of course, there but, it is not acceptable to uphold that wherever de jure control and possession of the vehicle stands transferred in law from the owner to the person on renting/hiring the service that the service tax is leviable and this is, of course, not different than services rendered on a contractual basis, providing transport service for fixed amount of periodical return or fare. This was reiterated by Hon ble High Court of Allahabad in the case of ANIL KUMAR AGNIHOTRI VERSUS COMMISSIONER, CENTAL EXCISE KANPUR 2018 (1) TMI 171 - ALLAHABAD HIGH COURT earlier also. The Punjab Haryana High Court was also considering the question as to whether transport service provided by the respondent-firm to the Indian Oil Corporation was liable to service tax or not. The Court, after considering various provisions as also decision of the High Court of Judicature at Madras in the case of SECY. FEDERATION OF BUS-OPERATORS ASSN. OF TN VERSUS UNION OF INDIA 2001 (4) TMI 7 - MADRAS HIGH COURT , applied all vital observations of Madras High Court mutatis mutandis to the case before the High Court. Accordingly, it held that transport service provided to Indian Oil Corporation was the taxable service and it set aside the decision of the Tribunal by upholding the view canvassed by the Revenue. The appellant providing several numbers of vehicles to BSNL etc. on monthly basis against considerations which otherwise are on yearly basis. Also keeping in view the appellant is admittedly registered as rent-a-cab service provider, we hereby answer the question so framed in affirmative i.e. in favour of revenue. Appeal dismissed.
Issues Involved:
1. Whether the appellant provided Rent-a-Cab service. 2. Applicability of service tax on the appellant's services. 3. Interpretation of "renting" versus "hiring" in the context of service tax. 4. Legal definition and scope of "Rent-a-Cab Scheme Operator." 5. Liability of service tax on the appellant. 6. Invocation of extended period for tax liability. Comprehensive, Issue-Wise Detailed Analysis: 1. Whether the appellant provided Rent-a-Cab service: The primary issue was to determine if the appellant's activities fell under the category of "Rent-a-Cab service." The Tribunal examined the nature of the services provided by the appellant, which involved supplying vehicles with drivers to BSNL on a monthly basis. The appellant argued that they retained control over the vehicles and that their activities did not constitute renting but rather hiring, which should be outside the purview of service tax. 2. Applicability of service tax on the appellant's services: The Tribunal referred to Section 65(48)(o) of the Finance Act, which defines "taxable service" as any service provided by a rent-a-cab scheme operator in relation to renting of a cab. The Tribunal emphasized that the term "in relation to" should be interpreted broadly, covering any service directly or indirectly connected to renting a cab. The Tribunal concluded that the appellant's services, which involved providing vehicles on a rental basis, fell within this definition, making them liable for service tax. 3. Interpretation of "renting" versus "hiring" in the context of service tax: The Tribunal delved into the definitions of "rent" and "hire" from various legal and dictionary sources. It noted that both terms involve payment for the use of something, but renting typically implies a longer-term arrangement with de facto possession, while hiring might be for a shorter duration. The Tribunal concluded that the distinction between renting and hiring does not exclude the appellant's services from being taxable, as the legislative intent was to tax both renting and hiring of cabs. 4. Legal definition and scope of "Rent-a-Cab Scheme Operator": The Tribunal discussed the evolution of the definition of "Rent-a-Cab Scheme Operator" under the Finance Act. Initially, it required a license under the Rent-a-Cab Scheme, 1988, but post-amendment, it broadly included any person engaged in the business of renting cabs. The Tribunal highlighted that the revised definition expanded the scope to cover more operators, including those without a formal license but engaged in the business of renting cabs. 5. Liability of service tax on the appellant: The Tribunal referred to previous judgments, including those from the High Courts of Allahabad, Punjab & Haryana, and Gujarat, which consistently held that services involving the renting of vehicles are taxable. The Tribunal also cited the Principal Bench's decision in Carzonrent (India) Pvt. Ltd. vs. Commissioner of Service Tax, Delhi, which confirmed the liability of service tax on rent-a-cab operators even if the control of the vehicle remained with the operator. 6. Invocation of extended period for tax liability: The Tribunal addressed the issue of invoking the extended period for tax recovery. It noted that for the extended period to apply, there must be a deliberate act of suppression or mala fide intention. The Tribunal found that the appellant had not demonstrated any such deliberate act, and there was ambiguity in the law during the relevant period. Therefore, the invocation of the extended period was not justified. Conclusion: The Tribunal upheld the order under challenge, confirming that the appellant's services were taxable under the category of "Rent-a-Cab service." The appeal was dismissed, and the Tribunal found no infirmity in the original order. The judgment was pronounced in open court on 24/06/2020.
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