Rent-a-cab service tax liability upheld, with interim penalty relief granted only on deposit of the tax demand.

A rent-a-cab operator may be treated as providing a taxable service under the Finance Act, 1994 even without a licence under the Motor Vehicles Act, 1988. On the request for interim protection, financial hardship was not accepted because the record did not sufficiently support it, especially given the scale of operations. Conditional interim stay of the penalty demand was therefore granted, but only on deposit of the entire service tax demanded under the impugned orders within the stipulated time, failing which the defaulting appellant would face dismissal.

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Issues: Whether interim stay of the penalty amounts should be granted, subject to deposit of the service tax demanded under the impugned orders.

Analysis: The appeals concerned liability to service tax on rent-a-cab operator service under the Finance Act, 1994. For the purpose of service tax, a rent-a-cab scheme operator was treated as a person engaged in the business of renting of cabs, and the absence of a licence under the Motor Vehicles Act, 1988 did not negate the taxable character of the service. The plea of financial hardship was found unsupported by sufficient material, particularly in view of the scale of the appellant's operations.

Conclusion: Interim stay of the penalty amounts was granted on condition that the entire service tax payable under the impugned orders be deposited within the stipulated time, failing which the appeal of the defaulting appellant would stand dismissed.

Final Conclusion: Conditional interim protection was granted in respect of the penalty demand, while the service tax liability was required to be secured by deposit within the time allowed.

Ratio Decidendi: A person engaged in renting cabs may be treated as a rent-a-cab scheme operator for service tax purposes even without a licence under the motor vehicle scheme, and interim relief may be conditioned on deposit where financial hardship is not established.

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