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2024 (10) TMI 566 - AT - Service TaxClassification of services - rent a cab service or Transportation Services? - providing transportation services to employees of a client - Abatement under Notification no. 1/2006 dated 01.03.2006 - Benefit of Cum Duty value - Extended period of limitation - interest - penalty. - HELD THAT - A perusal of the service tax Registration Certificate reveals that the appellant was registered for provision of Cab operators service. The appellant was renting vehicles viz., Tavera, Indica etc to his clients for their activities which included pick-up and drop facility to their employees. The consideration received is on kilometre basis. It is also noted that the charges were inclusive of all taxes, insurance etc. The rental for a long period of time such as 11 months. From the clauses of the agreement placed on record, it is clear that the appellant was renting out his cab to his clients and not providing point to point transportation, as claimed by him. The impugned order has carefully examined this aspect as well. The liability to tax arises when a rent-a-cab operator provides a vehicle to another person on rent and receives consideration. In M/S. RS. TRAVELS VERSUS CCE, MEERUT 2008 (7) TMI 27 - CESTAT NEW DELHI , the Tribunal, relying on the decision in the case of EXPRESS TOURS TRAVELS PVT. LTD. VERSUS COMMISSIONER OF C. EX., VADODARA 2005 (4) TMI 5 - CESTAT, MUMBAI , held that that the Government's intention, is to tax the provider of a service, which involves hire and renting of a cab formally for a long period. It was further held that the test for ascertaining whether an activity is covered by the entry rent-a-cab operator service is as to whether it involves giving a cab with or without driver to a client for a certain period of time for some consideration, which can be on per hour or per day or per month basis. In the instant case, it is noted that the car had been hired on monthly basis to their clients, as per the Agreements on file. Accordingly, the impugned order is correct in holding that the appellant is liable to service tax in respect of the services rendered by him under the category of rent-a-cab services . In the present case, the RTA issues a special permit to the vehicle for operation as Contract Carriage. Therefore, in order to be eligible for the exemption under the said Notification, the appellant should satisfy the Contract Carriage conditions as enumerated above. The other conditions require the vehicles to ply in a specific route only, specified fare table is to be exhibited in the vehicle, a taximeter should be fixed etc. In the absence of any such compliance to the requirements stated above, the appellant cannot be considered eligible for the exemption as claimed by them. Abatement under Notification no. 1/2006 dated 01.03.2006 - HELD THAT - Appellant has submitted that they are eligible for abatement under Notification no. 1/2006 dated 01.03.2006, as they had not availed any Cenvat Credit and the benefit of Notification No. 1/2003-ST dated 20.06.2003 was not availed by them. It is found that this contention of the appellant has been rejected by the adjudicating authority as no evidence had been submitted by them in this regard. In view of the same, there are no infirmity in the impugned order - the appellant is not eligible for the exemption under Notification 25/2012-ST dated 20.06.2012. Benefit of Cum Duty value - HELD THAT - A perusal of the sample invoices submitted by the appellant indicates that the value charged is the gross amount. The Agreements with the clients also indicate that the rate was inclusive of all taxes. It is observed that in the case of TRIVENI UDYOG, SH SURENDRAMADHANI, AGARWAL SONS, GOVIND BOORA BHANDAR, MAHESH BOORA UDYOG, SHANKER PRODUCTS RAMESHWAR UDYOG VERSUS C.C.E. JAIPUR-I 2017 (6) TMI 699 - CESTAT NEW DELHI , it was held that for the goods already sold to the customer, it is an accepted principle that the assessee would be entitled to cum-duty benefit as the duty component now cannot be recovered separately from the customers. In other words, the sale price of the goods is to be treated as inclusive of the duty component. Consequently, the appellant should be given the benefit of cum-duty value. Extended period of limitation - HELD THAT - The show cause notice has recorded that the appellant had charged Service Tax from Mahindra Logistics vide the invoices issued to the said Company, but had not deposited the same to the Government treasury. The Ld. Counsel submitted that mere non-declaration does not amount to suppression of facts, and some positive evidence of intent to evade is to be evidenced by the Department. In this regard, the appellant had collected the tax from his client, but did not discharge his liability nor filed any returns. This clearly establishes his intent to evade - the extended period has been rightly invoked in the impugned order. Interest - HELD THAT - In the case of PRATIBHA PROCESSORS VERSUS UNION OF INDIA 1996 (10) TMI 88 - SUPREME COURT the Supreme Court held that Interest is compensatory in character and is imposed on an assessee who has withheld payment of any tax as and when it is due and payable . Accordingly, the demand of interest in the impugned order is correct. Penalty - HELD THAT - The penalty imposed under Section 77(2) of the Finance Act, 1994 is upheld. The impugned order is upheld - it is directed that the demand may be recalculated after extending cum duty benefit to the appellant. The penalty equal to the demand under Section 78 of the Act will stand modified to the extent of the revised demand. Appeal allowed by way of remand for calculation of demand.
Issues Involved:
1. Classification of services provided by the appellant as "Rent-a-Cab Service." 2. Eligibility for exemption under Notification No. 25/2012-ST. 3. Eligibility for abatement under Notification No. 1/2006. 4. Invocation of the extended period of limitation. 5. Imposition of interest and penalties under Sections 75, 77, and 78 of the Finance Act, 1994. 6. Entitlement to cum-tax benefit. Issue-wise Detailed Analysis: 1. Classification of Services: The Tribunal examined whether the services provided by the appellant should be classified as "Rent-a-Cab Service." The appellant argued that they provided point-to-point transportation services and not rent-a-cab services. However, the Tribunal noted that the appellant was registered under the category of cab operators' service and provided vehicles on a rental basis, with the control and possession of the vehicle remaining with the appellant. The Tribunal held that the services rendered fell under the category of "Rent-a-Cab Service" as the appellant was engaged in renting vehicles like Tavera and Indica to clients for pick-up and drop facilities, with charges based on kilometers and inclusive of all taxes. The Tribunal cited precedents such as CST v. Vijay Travels and R.S. Travels to support its conclusion. 2. Eligibility for Exemption under Notification No. 25/2012-ST: The appellant claimed exemption under Notification No. 25/2012-ST, arguing that post 01.07.2012, their services were exempt as they were transporting passengers on a contract carriage. The Tribunal examined the conditions under the Motor Vehicles Act, 1988, for contract carriage permits and found that the appellant did not comply with these conditions, such as operating on specific routes and exhibiting fare tables. Therefore, the appellant was not eligible for the exemption. 3. Eligibility for Abatement under Notification No. 1/2006: The appellant contended they were eligible for a 60% abatement under Notification No. 1/2006 as they had not availed of Cenvat Credit. The Tribunal rejected this claim due to a lack of evidence provided by the appellant to substantiate their eligibility for the abatement, as noted by the adjudicating authority. 4. Invocation of Extended Period of Limitation: The Tribunal addressed the invocation of the extended period of limitation. It found that the appellant had charged service tax but failed to deposit it with the government, indicating an intent to evade tax. Citing the case of Bhagwati Caterers Pvt Ltd, the Tribunal upheld the invocation of the extended period due to the appellant's failure to file returns and deposit collected taxes. 5. Imposition of Interest and Penalties: Interest under Section 75 was deemed compensatory for the appellant's withholding of tax payments. The Tribunal upheld the imposition of penalties under Sections 77 and 78, noting the appellant's failure to comply with statutory obligations and the intent to evade tax. The penalty under Section 78 was modified to align with the revised demand after recalculating the cum-duty benefit. 6. Entitlement to Cum-Tax Benefit: The Tribunal agreed with the appellant's claim for cum-tax benefit, observing that the invoices indicated a gross amount inclusive of taxes. Citing the case of Triveni Udyog, the Tribunal directed the demand to be recalculated to extend the cum-duty benefit to the appellant. Conclusion: The Tribunal upheld the impugned order with modifications, allowing for the recalculation of the demand to extend the cum-duty benefit and modifying the penalty under Section 78. The appeal was allowed to the extent indicated, with the order pronounced in open court on 23.09.2024.
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