2012 (6) TMI 390 - AT - Service Tax

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 ... Rent-a-cab service - service tax demand along with interest thereon and a penalty of equivalent amount - the appellant had supplied the buses along with driver and was receiving consideration on a kilometer basis from PCMT – Held that:- As per the agreement, the appellant should supply medium buses having 46 sitting capacity of 30 numbers and mini buses having 32 sitting capacity of 20 numbers to ply the buses on PCMT permit granted by RTO registered in the name of PCMT as lessee and will operate as stage carriers within the operational area of PCMT - from the agreement, it is clear that the appellant is renting or hiring buses to PCMT who undertakes the transport to passengers, on stage carriage basis - For the renting/leasing of buses, the appellant receives a consideration on a per km basis for the distance actually run – Considering the definition of 'Rent-a-cab scheme operator' u/s 65(91) the assessee is held liable to be fall under it - Merely because the appellant has also provided a driver in terms of the contract, who drives the vehicle, it does not mean that the contract is not for renting of cabs – appellant to make a pre-deposit of 50% of the service tax adjudged in the instant case within a period of eight weeks from the date of order - against assessee. 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.