2024 (1) TMI 1121 - AT - Service Tax

Classification of service - rent-a-cab service or not? - providing vehicles to the Government Departments, Sister concerns and private parties - appellant is a 100% owned undertaking of Government of Tamil Nadu - HELD THAT - The appellant is a State Trsnport Corporation owned by Tamil Nadu Government and they do not fall under the definition of Rent-a-Cab Scheme Operator. Further, the issue is no more res integra and has been settled by decisions of the co-ordinate Bench of the Tribunal in the case of BANGALORE METROPOLITAN TRANSPORT CORPORATION VERSUS COMMISSIONER OF SERVICE TAX 2015 (2) TMI 100 - CESTAT BANGALORE . It is also found that the said judgement of the Tribunal has been upheld by the Hon ble Supreme Court in COMMISSIONER OF SERVICE TAX, BANGALORE VERSUS BANGALORE METROPOLITAN TRANSPORT CORPORATION 2015 (2) TMI 148 - SC ORDER , where it was held that The business undertaken by BMTC is to provide bus facility/transport facility to the citizens of Bangalore city and the main activity is running the buses in the city for the convenience of citizens and not a rent-a-cab scheme operation. We find that the definition itself excludes BMTC from the category of service providers. The impugned order is not sustainable in law - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the evasion of service tax by providing vehicles to various entities, the interpretation of the Rent-a-Cab operator scheme, and the imposition of penalties under relevant sections of the Finance Act, 1994.

Evasion of Service Tax:
The appellant, a government undertaking providing transport services, was alleged to have evaded service tax by providing vehicles to government departments, sister concerns, and private parties without appropriate amendments in the Service Tax Registration certificate. A show cause notice was issued proposing a demand of Rs.1,38,571/- as service tax along with interest and penalties under various sections of the Finance Act, 1994.

Interpretation of Rent-a-Cab Operator Scheme:
The appellant contended that they were not covered by the Rent-a-Cab operator scheme as they were not engaged in renting cabs as an organized and continuous activity. The appellant argued that the statutory definition of a Rent-a-Cab operator scheme did not apply to them as they were a State Government Corporation providing transport services, not operating a cab rental business.

Judicial Precedents and Legal Interpretation:
The appellant cited various judicial decisions, including cases involving Bangalore Metropolitan Transport Corporation and Gujarat State Road Transport Corporation, to support their argument that they did not fall under the Rent-a-Cab operator scheme. The Tribunal found that the appellant, being a State Transport Corporation, did not meet the criteria of a Rent-a-Cab operator as defined in the Finance Act, 1994.

Decision:
After considering the submissions and legal precedents, the Tribunal held that the appellant was not engaged in the business of renting cabs and therefore was not liable under the Rent-a-Cab operator scheme. Citing previous decisions, the Tribunal set aside the impugned order, allowing the appeal of the appellant with consequential relief, if any, as per law.

Separate Judgment by Judges:
The judgment was delivered by Mr. S.S. GARG, MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) on 25.01.2024.