2017 (2) TMI 489 - AT - Service Tax

Rent-a-cab Scheme Operator Service - contract with two schools namely Delhi Public School and Jain International School for providing transportation service to the students enrolled in the said schools to bring students from their respective residences to school and back from school to residences - CBEC under letter F.No.137/70/2007-CX-4 dated 15.12.2008 - whether the said service is covered by the phrase rented for use by an educational body? Held that - so long as the motor vehicles or cab which are rented by anyone and they are used by service receivers and such service is used by an educational body then such vehicles are not covered by definition of Cab in the said Section - In the present case the educational body is using the said vehicles for bringing the students to schools and back to their houses and they are also rented. Therefore, they are covered by the phrase rented for use by an educational body. Therefore, the vehicles are not covered by the definition of Cab under Section 65 (20) of the Finance Act, 1994 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of service tax liability on transportation services provided by a private bus operator to school children.
2. Applicability of Rent-a-cab Scheme Operator Service and Service Tax exemption under Notification No.25/2012.
3. Analysis of the definition of 'Cab' under Section 65(20) of the Finance Act, 1994 in the context of educational body usage.

Issue 1:
The appeal challenged the service tax demand on transportation services provided to school children by a private bus operator. The Revenue contended that the services fell under the Rent-a-cab Scheme Operator Service and were taxable. The appellant argued that the services were exempt as clarified by CBEC under a specific letter. The Original authority held that the exemption did not apply as the consideration was received from parents, not the school. The Tribunal analyzed the contract terms, noting that the buses were used for transporting students to and from schools. The Tribunal considered the Mega exemption under Notification No.25/2012 and the definition of 'Cab' under the Finance Act, 1994.

Issue 2:
The appellant contended that the transportation services were exempt from Service Tax under Notification No.25/2012 for educational purposes. The Tribunal considered the appellant's arguments, focusing on the interpretation of the exemption notification and the specific clause related to transportation of students for educational purposes. The Tribunal examined the applicability of the exemption with effect from 01.07.2012 and the conditions under which the services would qualify for the exemption.

Issue 3:
The Tribunal analyzed the definition of 'Cab' under Section 65(20) of the Finance Act, 1994 in the context of services provided to an educational body. The appellant argued that the buses were rented for use by the schools, thus falling outside the definition of 'Cab.' The Tribunal examined the proviso to the definition, which excluded vehicles rented for use by an educational body imparting skills or knowledge. The Tribunal concluded that the buses, being used by schools for transporting students, were covered by the phrase 'rented for use by an educational body,' thus not falling under the definition of 'Cab.' Consequently, the show cause notice was deemed unsustainable, and the appeal was allowed, entitling the appellant to consequential relief.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's reasoning in reaching its decision.