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TMI Blog2017 (11) TMI 773X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the number of kilometers travelled. These are all matters, which are regulated by the Government. Unlike the said scenario, in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which, undoubtedly, implies that he must have possession and control over the vehicle. This is the fundamental distinction between rent-a-cab and a pure case of hiring. Though both, rent and hire, may, in a different context, have the same connotation; in the context of rent-a-cab scheme and hiring, we are of the view that they signify two different transactions. What the lawgiver has chosen fit to tax by way of imposition of Service Tax is only transaction relating to business of renting of cabs. It is also pertinent to bear in mind that, in the case of hiring, the hirer may refuse to provide the service to the prospective customer. We cannot accept the argument of the learned counsel for the appellant that the Court must ignore the provisions of Section 75 of the Motor Vehicles Act. We are of the view that, when the lawgiver introduced this new source of taxation, it must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exemption will not cover contract carriage on hire - the demand of service tax in all these appeals for the period from 01.07.2012 onwards is justified by law. Penalties - Held that: - considering that the matter is one of interpretation and that the question of taxability on the services was mired in confusion and litigation, the penalties imposed in all these cases are set aside. Appeal allowed in part. - ST/01886/2012, ST/25921/2013, ST/22292/2015, ST/30095-98/2016, ST/30120-23/2016, ST/30442-45/2016, ST/30483/2016, ST/30564/2016, ST/30123-30/2017 & ST/30354/2017 - A/31658-31683/2017 - Dated:- 24-10-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. Madhu Mohan Damodhar, Member(Technical) Shri G. Natarajan, Advocate for the Appellant. Sh. B. Raja Ambedkar, Superintendent/Shri Amar Prakash, Asst. Commissionr/(ARs) ORDER [Order per: Bench] 1. All these 26 appeals since involving identical issue, they are taken up together for common disposal. The common facts in all these appeals are that Andhra Pradesh State Road Transport Corporation (APSRTC), the appellants herein, are engaged in operation of buses in the State of Andhra Pradesh for trave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 01.06.2007-31.12.2011 274,178.00 11. ST/30123/2016 APSRTC-Tanuku 01.01.2012-30.03.2013 96,258.00 12. ST/30442/2016 APSRTC-Jangareddygudem 01.07.2012-31.03.2014 146,122.00 13. ST/30443/2016 APSRTC-Tanuku 01.04.2013-30.09.2014 126,486.00 14. ST/30444/2016 APSRTC-Tadepalligudem 01.07.2012-30.03.2014 130,947.00 15. ST/30445/2016 APSRTC-Bhimavaram 10/2012 - 03/2014 291,665.00 16. ST/30483/2016 APSRTC-Eluru July 2012 - March 2013 202,272.00 17. ST/30564/2016 APSRTC-Narasapuram 04/2013 - 03/2014 83,666.00 18. ST/30123/2017 APSRTC-Narasapura ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession and control of the vehicles always remain with APSRTC and hence the demand of service tax under rent a cab operator service is not sustainable. (c) From 01.07.2012, a negative list based service tax levy was imposed and the term service has been defined in Section 65 B (44) of the Act and all services, other than those mentioned in the negative list or exempted from payment of service tax are liable to levy of service tax. (d) Section 66 D of the Act, containing the negative list covers the following, during the relevant period. Service of transportation of passengers, with or without accompanied belongings by- (i) A stage carriage; (ii) Railways in a class other than- (A) First class; or (B) An airconditioned coach; (iii) Metro, monorail or tramway; (iv) Inland waterways; (v) Public transport, other than predominantly for tourism purpose, in a vessel between places located in India and (vi) Metered cabs, radio taxis or auto rickshaws. (e) Further, the following exemption has been provided for under notification 25/2012 ST dated 20.06.2012. Transport of passengers, with or without accompanies belongings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14(34)STR 44 (Tri.-Del); (d) M/s Carzonrent (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi-I (2017(50)STR 172 (Tri.-Del.); (e) M/s Lawrence Travels Vs. CCE, Nashik (2013(32)STR 715 (Tri.-Mumbai). (f) M/s Neeraj Constructions Vs. CCE, Jaipur (2009(13)STR 145 (Tri.-Del.). 6. Heard both sides and have gone through the facts of the case. Rent-a-cab service was brought into Service Tax net w.e.f. 16.09.1997. Section 65 (41) (r) defining the service as taxable service as any service provided to any person by renting cab operator in relation to renting of a cab . Erstwhile vide section 65(32), rent-a-cab operator was defined as person who is the holder of a licence under Rent-a-Cab scheme, 1989, framed by Central Government under Motor Vehicles Act, 1988 . These provisions were amended a number of times. As it stood as substituted by Finance Act, 2003 and further amended by Finance Act, 2007, aforesaid definitions had evolved as follows: As substituted by the Finance Act, 2003: Section 65(105) (o) Taxable service means any service provided to any person by a rent-a-cab scheme operator in relation to the renting of a cab; Section 65 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtions of the judgment are reproduced as under: What is sought to be taxed under the provisions, which we have adverted to in this judgment, is service, which is rendered in relation to renting of cabs. Under Section 65(91) of the Service Tax Act, rent-a-cab scheme operator has been defined as a person, who is engaged in the renting of cabs. The words in relation to , undoubtedly, do have the effect of expanding the scope of taxation. With this proposition, we can have no quarrel. But, this cannot detract from our enquiring into as to what is the transaction, which is actually brought to tax. We are constrained to pose this question and answer this question as what is sought to be taxed is the service in relation to the renting of cabs. So, the most important and crucial element, which we must bear in mind, is, whether there is a business of renting of cabs. Unless there is renting of cabs, there is no question of further enquiring as to the services, which may be rendered therein. In other words, any service, which may be rendered and which does not relate to renting of cabs, would be irrelevant for our consideration. When we consider the matter in the said light, we have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of his movements from time to time. (2) If an individual or company has hired the vehicles as a leader of the tourist party, it shall be the duty of such leader of the party to keep the holder of the licence informed of the movement of each vehicle, from time to time. (3) If a hirer so desires, he may engage a person possessing a valid driving licence to drive the vehicle so hired during the period of the hire agreement. A perusal of Clause 10 would re-enforce us in the view that we are taking that, under the rent-a-cab scheme, the hirer is endowed with the freedom to take the vehicle, wherever he wishes, and he is only obliged to keep the holder of the licence informed of his movements from time to time. When a person chooses to hire a car, which is offered on the strength of a permit issued by the Motor Vehicles Department, then the owner of the vehicle, who may or may not be the driver, will offer his service while retaining the control and possession of the vehicle with himself. The customer is merely enabled to make use of the vehicle by travelling in the vehicle. In the case of a passenger, he is expected to pay the metered charges, which is usually collected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a scheme stood framed as early as in 1989. We are, therefore, of the view that, unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under Section 65(105)(o), read with Section 65(91) of the Service Tax Act. 9. The ratio of Sachin Malhotra judgment was followed by Hon ble High Court of Uttarakhand in their subsequent judgment in the case of Commissioner of Customs Cx Meerut Vs. R.S. Travels, where the Hon ble High Court reiterated that when there is only a contract of hire and there is no renting of cab, there is no question of assessee being assessed in respect of services rendered in connection with rent-a-cab service. The above judgments of Hon ble High Court have been followed by the Tribunal in the following cases: (a) CCE Vs P.B. Bobde [2015(40) S.T.R 953 (Tri.-Mumbai) (b) Rahul Travels Vs. CCE, Nagpur [2017(47) S.T.R. 332 (Tri.-Mumbai). 10. Following the ratio of aforesaid High Court judgments and Tribunal decisions, we also hold that in all these impugned cases, there cannot be any tax liability on the appellants till 30.06.2012, in respect of hire charges received by them for prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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