2007 (9) TMI 248 - AT - Service Tax

Appellant are engaged in the business of hiring and renting of vehicles - appellants have failed to obtain Service Tax Registration, failed to pay service tax and non-furnishing of required information held that service tax was payable even if a person was engaged in the business of engaging taxis for customers and giving them service even without owning or plying the vehicle, under the category of running rent-a-cab scheme of operators larger period invocable penalty justified

Summary

Issues:
- Failure to obtain Service Tax Registration and pay service tax
- Failure to file service tax returns
- Imposition of penalty under Sections 77 & 78 of Finance Act, 1994
- Dispute regarding service tax rate
- Liability to service tax upheld based on legal precedent
- Upholding of demand of duty and interest by Commissioner (Appeals)
- Justification for penalty imposition and time limit extension

Analysis:

1. Failure to Obtain Service Tax Registration and Pay Service Tax:
The appellant, engaged in hiring and renting vehicles to Gujarat Electricity Board, collected a significant amount without obtaining Service Tax Registration under Section 69 of Finance Act, 1994, and failed to pay the service tax. The original authority imposed a demand of Rs. 2,27,177/- along with interest and penalties under Sections 77 & 78 of the Finance Act, 1994. The Commissioner (Appeals) upheld this decision, emphasizing the appellant's non-compliance with registration and payment obligations.

2. Imposition of Penalty under Sections 77 & 78 of Finance Act, 1994:
The penalty under Sections 77 & 78 of the Finance Act, 1994 was imposed due to the appellant's failure to obtain Service Tax Registration, pay service tax, and file service tax returns. The Commissioner (Appeals) justified the penalty imposition, highlighting the appellant's lack of cooperation in providing requested information to the department despite multiple communications.

3. Dispute Regarding Service Tax Rate:
A discrepancy arose regarding the applicable service tax rate, with the appellant arguing for a lower rate prior to a specific date. The Commissioner (Appeals) acknowledged this discrepancy and directed a reworking of the duty liability by treating the received amount as cum-duty-price. This issue was remanded for further consideration.

4. Liability to Service Tax Upheld Based on Legal Precedent:
The liability to service tax was upheld by referencing a decision of the Hon'ble High Court, Madras, which established that service tax was payable even if a person engaged in providing services without owning or operating the vehicles. This legal precedent supported the Commissioner (Appeals)' decision to uphold the demand of duty and interest.

5. Justification for Penalty Imposition and Time Limit Extension:
The Commissioner (Appeals) justified the imposition of penalties and the extension of the time limit for demanding duty based on the appellant's failure to register for service tax, pay the due amount, and provide necessary information to the department. The decision to limit penalty under Section 78 of the Finance Act to the extent of demand was also supported.

6. Conclusion:
Ultimately, the tribunal rejected the appeal, citing the lack of valid grounds to interfere with the Commissioner (Appeals)' findings and reasoning. The appellant's non-compliance with service tax regulations, failure to cooperate with authorities, and the legal precedent supporting the liability to service tax formed the basis for upholding the original decision.