2024 (3) TMI 858 - AT - Service Tax

Exemption from service tax - rent-a-cab service - State Transport Undertaking - reverse charge mechanism - Extended period of limitation - HELD THAT - The issue is no more res integra. In BANGALORE METROPOLITAN TRANSPORT CORPORATION VERSUS COMMISSIONER OF SERVICE TAX 2015 (2) TMI 100 - CESTAT BANGALORE it has been held at the business undertaken by BMTC is to provide bus facility /transport facility to the citizens of Bangalore city and main activity is that running the buses in the city for convenience of the citizens and thus it cannot be called as a rent-a-cab service operation. The definition of cab under section 65 (20) of Finance Act, 1994 of maxicab under section 65 (70) of Finance Act read with Section 2 (22) of Motor Vehicle Act and of rent-a cab scheme operator defined under section 65 (91) along with the meaning of taxable service in relation to renting of cabs given under section 65 (105)(a) of the Finance Act, 1944 have been examined by the Tribunal in BMTC case. The Tribunal has held that definition itself excludes State Transport Undertakings (Bangalore s BMTC in said case) from the category of service providers. Though in the present case the appellant is alleged to be the recipient of rent-a- cab service and is held liable under reverse charge mechanism (RCM) it is observed that Notification No. 25/2012 dated 20.6.2012 exempts State Transport Undertaking from any tax liability. The decision of Maulana Azad is well applicable to present case - appellant is not liable to service tax for receiving buses and taxis on hire. The appellant cannot be made liable to tax not even under RCM for receiving legal consultancy services. Extended period of limitation - HELD THAT - There is no evidence found on record proving such intent / mensrea with the appellant to evade payment of service tax. The appellant have already been held not liable to pay the amount confirmed. Resultantly, it is held that the department has wrongly invoked the extended period of limitation while issuing Show Cause Notice. There is no rational in confirming the impugned demand even under reverse charge mechanism - the demand on both the counts is wrongly being confirmed by the adjudicating authority below. Hence the order under challenge (Order-in-Original) is hereby set aside - appeal allowed.

Summary

Issues Involved:
The issues involved in this case include the invocation of the extended period of limitation for non-payment of service tax, liability under reverse charge mechanism, and the applicability of tax liability on State Transport Undertakings.

Extended Period of Limitation:
The appellant raised objections to the Show Cause Notice, arguing that it was barred by time as the demand for the period 2012-13 and 2013-14 was proposed in February 2016. They contended that limitations cannot be invoked based solely on audit observations. Reference was made to the decision in the case of M/s. G D Goenka Pvt. Ltd. vs. Commissioner of Central Goods and Service Tax, Delhi South. The appellant asserted that statutory bodies like themselves cannot be accused of having the intent to evade duty, citing the case of M/s. Chandigarh Transport Corporation vs Commissioner of Central Excise, Chandigarh I. The Tribunal found that there was no evidence of intent to evade tax, thus concluding that the extended period of limitation was wrongly invoked by the department.

Liability Under Reverse Charge Mechanism:
The department alleged that the appellant was liable under the reverse charge mechanism for services received, including buses and taxis on hire, and legal services. The appellant argued that as a State Transport Undertaking, they were exempt from tax liability as per Notification No. 25/2012 dated 20.6.2012. They also contended that the hiring of buses was exempt from service tax as per section 22 of Notification 32 of 2016. The Tribunal agreed with the appellant's arguments, holding that they were not liable to pay service tax for receiving buses and taxis on hire due to their status as a State Transport Undertaking.

Applicability of Tax Liability on State Transport Undertakings:
The Tribunal examined the definition of cab services and rent-a-cab operators in relation to State Transport Undertakings. Referring to precedents such as Bangalore Metropolitan Transport Corporation (BMTC) and Gujarat State Road Transport Corporation, it was established that State Transport Undertakings were excluded from the category of service providers for certain services. The Tribunal upheld that the appellant, being a State Transport Undertaking, was not liable for service tax under reverse charge mechanism for the services received.

In conclusion, the Tribunal set aside the Order-in-Original, ruling in favor of the appellant based on the lack of evidence of intent to evade tax, the exemption of State Transport Undertakings from tax liability, and the incorrect invocation of the extended period of limitation by the department.