2009 (5) TMI 389 - AT - Service Tax

Rent a cab services- The Appellant had entered into an agreement with M/s. ONGC Rajahmundry in respect of Rent-a-Cab services. As per the details of Form No. 16A Certificates provided by M/s. ONGC there was found to be an escapement of Service Tax. Consequently show-cause notice was issued for confirmation of the demand. The lower authority after adjudication confirmed the demand and imposed penalties. The Commissioner (Appeals) has upheld the order of the Original Authority. Held that-the appellant fall under the category of Rent a cab services . The contention of the appellant that there is an error in calculation thus the matter is remand back for proper calculation.

Summary

Issues: Appeal against Order-in-Appeal regarding Service Tax liability for "Rent-a-Cab" services.

Analysis:
1. Service Tax Liability: The appellants, a Travel Agency, were found to have not registered for Service Tax and not paid taxes on taxable services provided to M/s. ONGC for "Rent-a-Cab" services. The Department issued a show-cause notice for demand confirmation and penalties, which was upheld by the lower authorities. The appellants disputed being a "Rent-a-Cab" operator and challenged the calculation of Service Tax liability.

2. Contentions: The appellants argued they were not "Rent-a-Cab" operators as claimed by the Department, pointing out discrepancies in the calculation of the taxable value. They emphasized not owning the vehicles, which, according to them, excluded them from the "Rent-a-Cab" category.

3. Judgment: After considering the arguments, the Tribunal disagreed with the appellants' claim of not falling under the "Rent-a-Cab" operator category based on the contract analysis. However, acknowledging the calculation error in determining the Service Tax liability, the matter was remanded to the Commissioner (Appeals) for proper quantification. The Tribunal directed the lower authority to determine the correct liability and impose suitable penalties within three months from the date of the order.

This judgment highlights the importance of accurate quantification of Service Tax liability and the need for proper assessment based on the nature of services provided, even when disputing the categorization of the service. The decision to remand the matter for reevaluation demonstrates the Tribunal's commitment to ensuring fair and accurate tax assessments in line with legal provisions.