2023 (8) TMI 1319 - AT - Service Tax

Levy of Service Tax - rent- a-cab service - providing bus service to the school children for Transportation from their home to school and from school to home - service clearly for the school children who are taking education in the school run by M/s. J K Paper Limited - HELD THAT - From the definition of Cab it can be seen that the motor vehicle which is rented for use by an educational body imparting skill or knowledge or lesson on any subject or field shall not be included within the meaning of cab. In this case it is admitted fact that the motor vehicle has been used by an educational body i.e., school for transportation of school children. Therefore, the same is excluded from the definition of rent-a -cab. The lower authorities have denied the exclusion of such service in definition on the ground that the service recipient is J.K paper Limited which is a commercial organization and cannot be treated as educational body - the use of motor vehicle being for transportation of school children is clearly excluded from the definition of rent- a cab service. Therefore, the same is not liable to service tax. The impugned order is modified. The appeal is allowed.

Summary

Issues Involved:
The issue involved in this case is whether the appellant providing bus services for transportation of school children to a school owned by a commercial organization is liable to service tax under rent-a-cab service.

Summary:

Issue 1: Interpretation of "cab" under rent-a-cab service:
The appellant provided bus services for transporting school children to and from school, which the department claimed fell under rent-a-cab service. The appellant argued that the motor vehicles used for educational purposes are excluded from the definition of "cab" under Section 65(20) of the Finance Act, 1994. The Tribunal examined the definition of "cab" and noted that vehicles rented for use by an educational body imparting skills or knowledge are not considered cabs. As the buses were used exclusively for transporting school children, the Tribunal concluded that they were excluded from the definition of rent-a-cab service.

Issue 2: Exclusion of service under rent-a-cab definition:
The lower authorities had denied the exclusion of the service from the rent-a-cab definition on the grounds that the service recipient, J.K Paper Limited, was a commercial organization. However, the Tribunal disagreed, emphasizing that the transportation was solely for school children studying at J.K Paper Ltd's school, not for the commercial purposes of the organization. The Tribunal held that the use of the motor vehicle for transporting school children falls outside the rent-a-cab service definition, supporting the appellant's case based on various judgments. Consequently, the demand for service tax was deemed unsustainable.

Conclusion:
The Tribunal modified the impugned order, allowing the appeal and providing consequential relief as per the law. The stay application was also disposed of, with the decision pronounced openly on 17.08.2023.

This summary highlights the key issues addressed in the judgment, including the interpretation of "cab" under rent-a-cab service and the exclusion of services provided for educational purposes from the service tax liability.