2023 (9) TMI 1254 - AT - Service Tax

Non-payment of Service Tax - Rent-a-Cab Service - the fact that the turnover of each of the appellants was well within the exemption limit provided under Notification No. 06/2005 dated 01.03.2005 not taken into account by authorities - service qualify as rent a cab service or not - penalties - HELD THAT - The gross value of the taxable service rendered by each of the appellants is less than the threshold limit of Rs.10 Lakhs as prescribed under Notification No. 06/2005-ST dated 01.03.2005 after giving allowance to the exemption for 60% of the gross receipt in terms of Notification No. 01/2006-ST dated 01.03.2006. We find that the Departmental authorities have considered this principle and accepted the contention of the appellants in the case of VISHWANATH MISHRA VERSUS COMMR. OF C. EX., LUCKNOW 2018 (4) TMI 1677 - CESTAT ALLAHABAD and SECY. FEDERATION OF BUS-OPERATORS ASSN. OF TN VERSUS UNION OF INDIA 2001 (4) TMI 7 - MADRAS HIGH COURT . The Principal Bench of CESTAT, in the case of M/S. ASHOK KUMAR MISHRA VERSUS CCE, ALLAHABAD 2014 (1) TMI 609 - CESTAT NEW DELHI held that for the purpose of calculating the threshold limit, 60% of the consideration exempt, vide Notification No.01/2006, should not be taken into account. If 60% of the consideration received by the appellants is excluded, they fall under the exempted category and as such, are not liable to pay any tax. Therefore, we find that the appeals succeed on this count. Ongoing through the agreements relied upon by the appellants, it is found that the appellants have simply provided their buses to M/s PRTC on hire and have received remuneration on per-kilometre basis; there is no arrangement of renting. Classification of service as rent-a-cab service or not - HELD THAT - Hon ble High Court of Uttrakhand in the case of COMMISSIONER, CUSTOMS AND CENTRAL EXCISE, MEERUT-I VERSUS M/S. RS. TRAVELS 2014 (10) TMI 817 - UTTARAKHAND HIGH COURT held that when there is a contract of hire and there is no renting of a cab, there is no question of the assessee being assessed in respect of services rendered in connection with rent-a-cab as there is no renting at all. Therefore, we are of the considered opinion that the appeals succeed on the issue of classification of services also. Penalties - HELD THAT - The appeals succeed on both counts, the question of penalties does not arise. The impugned orders are not sustainable and are liable to be set aside - Appeal allowed.

Summary

Issues:
The issues involved in the judgment are whether the appellants provided "Rent-a-Cab Service" and failed to pay applicable service tax, and whether the appellants qualified for exemption under Notification No. 06/2005 dated 01.03.2005.

Issue 1: Rent-a-Cab Service and Service Tax Liability:
The appellants had contracts with M/s PRTC to provide one bus each, receiving remuneration on a per-kilometre basis. The Department alleged that this constituted "Rent-a-Cab Service" and demanded service tax. Show cause notices were issued and confirmed by various orders. The appellants contended that their turnover fell within the exemption limit under Notification No. 06/2005, with 60% of gross receipts exempt from service tax. They cited instances where similar cases were exempted by authorities. The appellants also argued that the service provided did not qualify as "Rent-a-Cab Service." The Tribunal found that the appellants' taxable service value was below the threshold of Rs.10 Lakhs, considering the exemption for 60% of gross receipts. Citing precedent cases, the Tribunal ruled in favor of the appellants, stating that they were not liable to pay tax as they fell under the exempted category. Additionally, the Tribunal noted that the appellants simply provided buses on hire without a renting arrangement, aligning with a previous High Court decision. Consequently, the Tribunal allowed the appeals on the grounds of service tax liability and classification of services, negating the need for penalties.

Issue 2: Exemption under Notification No. 06/2005:
The Tribunal examined whether the appellants qualified for exemption under Notification No. 06/2005 dated 01.03.2005. After considering the gross value of the taxable service rendered by each appellant and applying the exemption for 60% of gross receipts as per Notification No. 01/2006, the Tribunal found that the appellants fell below the threshold limit of Rs.10 Lakhs. Citing a precedent case, the Tribunal held that excluding 60% of the consideration received placed the appellants in the exempted category, absolving them from tax liability. Additionally, the Tribunal determined that the appellants' service provision did not constitute "Rent-a-Cab Service," as they simply hired out buses without a renting arrangement. Relying on legal precedents, the Tribunal concluded that the appellants met the criteria for exemption under the notification. Therefore, the Tribunal allowed the appeals based on the exemption criteria and the classification of services, leading to the setting aside of the impugned orders.