Tribunal Upholds Service Tax Liability for Rent-A-Cab Service, Partial Pre-Deposit Required

The Tribunal upheld the service tax liability of the appellant under the rent-a-cab service category, requiring them to make a partial pre-deposit of the service tax amount adjudged. The appellant's argument that their activity constituted a transport service rather than rent-a-cab service was dismissed, with the Tribunal emphasizing the agreement terms and legal provisions supporting the tax liability. The Tribunal granted a stay on the recovery of the balance amount pending the appeal, directing the appellant to comply with the partial pre-deposit to avail of the waiver for the remaining amount, interest, and penalty.

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Issues:
1. Whether the appellant's activity falls within the definition of "rent-a-cab service" for the purpose of service tax liability.
2. Whether the appellant is entitled to a waiver of pre-deposit of the service tax amount adjudged.

Analysis:

Issue 1:
The appellant, engaged in providing buses to a public transport undertaking, contested a service tax demand claiming their activity did not constitute "rent-a-cab service." The appellant argued that since they provided buses along with drivers and were in control of the vehicles, the service should be considered as a transport service, not rent-a-cab service. The appellant cited Tribunal decisions supporting their stance. However, the revenue authority contended that the appellant's activity fell within the definition of rent-a-cab service, making them liable for service tax. The Tribunal examined the agreement between the appellant and the transport undertaking, noting the terms requiring the supply of buses on a per km basis for passenger transport. The Tribunal concluded that the activity of providing buses on hire to the transport undertaking constituted rent-a-cab service as per the agreement terms and the relevant legal provisions.

Issue 2:
The appellant sought a waiver of pre-deposit of the service tax amount adjudged. The appellant argued that based on their interpretation of the agreement and previous Tribunal decisions, they were not liable for service tax under the rent-a-cab service category. However, the Tribunal, considering the agreement terms and legal provisions, found that the appellant did not establish a prima facie case for a complete waiver of the pre-deposit. The Tribunal directed the appellant to make a pre-deposit of 50% of the service tax adjudged within a specified period, with the remaining amount, interest, and penalty to be waived upon compliance. The Tribunal granted a stay on the recovery of the balance amount during the appeal's pendency.

In conclusion, the Tribunal upheld the service tax liability of the appellant under the rent-a-cab service category based on the agreement terms and legal provisions. The Tribunal directed the appellant to make a partial pre-deposit of the service tax amount adjudged, with a waiver of the remaining amount upon compliance.

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