Transport service classification depends on substance over label, with vehicle control and disclosure deciding tax treatment and limitation.

Service tax classification of transport arrangements turns on the contract and the actual control of vehicles. Transporting ONGC personnel in buses or vehicles used only for conveyance between specified points did not satisfy the statutory description of tourist vehicles, so tour operator service was not made out. On the other hand, a continuing arrangement with fixed charges, mileage adjustment, duty hours, maintenance, fuel and replacement obligations indicated that the vehicles were placed at ONGC's disposal under a rent-a-cab model, and the contract label was not decisive. On limitation, disclosure in returns and bona fide conduct were relevant to extended-period exposure, while penalty depended on the sustainability of the demand.

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Issues: (i) Whether the transportation of ONGC personnel in buses/vehicles supplied under the contract amounted to tour operator service. (ii) Whether the arrangement with ONGC constituted rent-a-cab service. (iii) Whether the demand was barred by limitation and whether penalty could survive.

Issue (i): Whether the transportation of ONGC personnel in buses/vehicles supplied under the contract amounted to tour operator service.

Analysis: The service could be treated as tour operator service only if the vehicles used were tourist vehicles and the assessee was engaged in operating tours in such vehicles. The contract and the vehicle specifications showed that the vehicles were used for conveying ONGC staff between specified points and were not shown to satisfy the requirements of a tourist vehicle. The vehicles did not answer the statutory description relied upon by the department for tour operator classification.

Conclusion: The service did not amount to tour operator service and the demand under that category was not sustainable.

Issue (ii): Whether the arrangement with ONGC constituted rent-a-cab service.

Analysis: The contract required the vehicles to be made available on a continuing basis, with fixed charges per vehicle, mileage-based adjustments, duty hours, replacement obligations, maintenance obligations, fuel responsibility, and payment linked to log books and usage. These terms showed that the assessee retained possession and control of the vehicles while placing them at the disposal of ONGC for use under the agreement. The legal character of the arrangement was therefore one of hiring out vehicles for consideration within the rent-a-cab framework rather than a mere loan or isolated use arrangement. The majority also held that the liability was not defeated by the nomenclature used in the contract.

Conclusion: The arrangement fell within rent-a-cab service.

Issue (iii): Whether the demand was barred by limitation and whether penalty could survive.

Analysis: The assessee had obtained registration, yet the record showed no satisfactory disclosure through returns and no convincing basis for claiming bona fide ignorance. The department's case of suppression was accepted, and the extended period was held available. However, in view of the final majority conclusion setting aside the demand itself, the penalty could not be sustained.

Conclusion: The extended period was available to the Revenue, but the final majority set aside the demand and penalty.

Final Conclusion: The majority decision granted relief to the assessee by setting aside the confirmation of demand and the penalty, and the impugned order was annulled on merits as well as on limitation.

Ratio Decidendi: For service tax classification, the true nature of the transport arrangement must be determined from the contract and actual control over the vehicles; where the assessee retains possession and provides vehicles on fixed commercial terms, the arrangement is taxable according to its substance and not its label, and limitation turns on disclosure and bona fide conduct.

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