2019 (2) TMI 767 - AT - Service Tax

Classification of services - supply of tangible goods service or not - rendering of radio taxi service - Held that - The issue has been considered by this Tribunal in appellant s own case M/S MERU CAB COMPANY PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE, MUMBAI-II 2015 (11) TMI 834 - CESTAT MUMBAI , where it was held that The agreement does not any where indicate that the drivers are having the possession of the vehicle for their use, which is the most important aspect to be covered under category of services under supply of tangible goods. Distinguishing the aforesaid judgment, the learned AR for the Revenue has submitted that with the introduction of the negative list, the judgment referred to above is not applicable. We do not find merit in the contention of the learned AR for the Revenue in as much as we have examined all the statement-on-demand notices issued from time to time to the appellant, refers to the basis on which the earlier show cause notices were raised - there are no valid reason not to follow the judgment of this Tribunal in appellant s own case referred to as above. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Whether the rendering of radio taxi service by the appellant constitutes the supply of tangible goods service.

Analysis:
The judgment revolves around the issue of whether the appellant's provision of radio taxi service amounts to the supply of tangible goods service. The appellant, a fleet taxi operator, provides taxis to drivers under subscriber agreements. The drivers operate the taxis to ply passengers within the city, collecting fares on behalf of the appellant. The appellant's call center facilitates booking requests from passengers, directing the nearest taxi to the customer. The dispute arose when demand notices alleged short payment of service tax due to the nature of the vehicles supplied to drivers. The Tribunal analyzed the definition of supply of tangible goods under Section 65(105)(zzzzj), emphasizing the importance of possession and control. It concluded that the appellant retained effective control over the taxis, as drivers operated under the appellant's directions, making the service more about the appellant serving passengers than the drivers using the vehicles. The agreement between the appellant and drivers further supported this view, highlighting the appellant's authority and control over the operation of the taxis.

The appellant relied on a previous Tribunal judgment in their favor, which the Revenue contested, citing changes in circumstances due to the negative list regime introduction. However, the Tribunal found no merit in the Revenue's argument, noting that the demand notices and subsequent orders failed to provide reasons different from the earlier decision in the appellant's favor. The Tribunal upheld its previous judgment, emphasizing that the appellant's service did not fall under the category of supply of tangible goods. Consequently, the impugned orders were set aside, and the appeals were allowed with any consequential relief as per the law.

In conclusion, the Tribunal's detailed analysis focused on the control and possession of the vehicles in the context of the appellant's radio taxi service, ultimately determining that the service provided was not a supply of tangible goods. The judgment reaffirmed the importance of contractual agreements, operational control, and the nature of the service provided in classifying the appellant's activities.