2013 (2) TMI 509 - AT - Service Tax

Rent-a-cab Services - non obtaining of service tax registration up to January 2008 and without paying service tax on the amount received by them for providing taxable service - whether the appellant herein is eligible to claim the benefit of cum-tax value on the bills which has been raised by him as service provider - Held that - As decided in Advantage Media Consultant (2008 (3) TMI 59 - CESTAT KOLKATA) also confirmed in 2008 (10) TMI 570 - SUPREME COURT Service tax is an indirect tax. As per this system of taxation, tax borne by the consumer of goods/services is collected by the assessee (manufacturer/service provider) and remitted to the Government. When the amount is collected for the provision of services, the total compensation received should be treated as inclusive of service tax due to be paid by the ultimate customer of the services unless service tax is also paid by the customer separately. So considered, when no tax is collected separately, the gross amount has to be adopted to quantify the tax liability treating it as value of taxable service plus service tax payable also this principle has been legislated with effect from 18-4-2006 in Section 67(2) of the Finance Act, 1994 that where the gross amount charged by a service provider, for the service provided or to be provided is inclusive of service tax payable, the value of such taxable service shall be such amount as with the addition of tax payable, is equal to the gross amount charged - the appellant is eligible to cum-tax benefit of the amounts received from the service recipient and the same being differential amount, which has been confirmed by the lower authorities the impugned orders to the extent they confirm the differential service tax liability of Rs. 33,929/- along with interest are set-aside and also the consequent penalties - in favour of assessee.

Summary

Issues:
1. Whether the appellant is eligible to claim the benefit of cum-tax value on the bills raised to the service recipient.

Analysis:
The case involved the appellant, engaged in providing Rent-a-cab Services without service tax registration or payment up to January 2008. The appellant provided vehicles to a company without showing service tax on invoices. The lower authorities confirmed a service tax demand, including penalties. The appellant contended that they should receive cum-tax benefit as per judicial precedents. The first appellate authority upheld the original order. The key issue was whether the appellant could claim cum-tax benefit on the amounts received from the service recipient.

The Tribunal analyzed the case, noting that the appellant had not initially paid service tax until pointed out and later paid based on their calculation. The agreement with the service recipient did not specify if the amount paid was inclusive of service tax. The Division Bench's decision in Advantage Media Consultant case was cited, emphasizing that the total compensation should be treated as inclusive of service tax unless paid separately. The Tribunal held that the appellant was eligible for cum-tax benefit based on the legislative principle in Section 67(2) of the Finance Act, 1994.

The Revenue argued that the absence of service tax mention on invoices did not imply inclusion and that the service recipient's work order did not clarify tax status. However, the Tribunal relied on the legislative provision and previous judicial decisions to support the appellant's claim for cum-tax benefit. The Tribunal referred to the Revenue's unsuccessful appeal to the Apex Court, which affirmed the Tribunal's decision. Consequently, the Tribunal set aside the service tax demand and related penalties, as the appellant was entitled to cum-tax benefit. The appeal was allowed, and the impugned order was set aside accordingly.