2014 (1) TMI 714 - AT - Service Tax

Tribunal rules on Service Tax dispute, directs 50% pre-deposit within six weeks for waiver and stay

The tribunal found no prima facie case for the appellant in a Service Tax dispute concerning the nature of services provided to KSRTC, determining that ... Waiver of pre deposit - Rent-a-Cab Service - Held that:- No prima facie case for the appellant. The nature of activity undertaken by them coupled with the terms of the relevant contract indicates that they were providing their buses to the KSRTC for hire charges. Prima facie, the activity would be covered by the definition of ‘rent-a-cab service’ given under Section 65 of the Finance Act, 1994. In any case, this service is more specific than “supply of tangible goods service” referred to by the learned Consultant. We are also not impressed with the plea of limitation and that of financial hardships at this stage - Conditional stay granted. Issues:1. Waiver and stay of Service Tax and penalty demanded from the appellant for the period from June 2007 to June 2008.2. Applicability of the demand under the heading 'Rent-a-Cab Service' or 'Supply of Tangible Goods Service.'3. Claim of time-barred demand and financial hardships by the appellant.4. Prima facie case for the appellant based on the nature of the activity undertaken.Analysis:1. The application sought waiver and stay concerning the Service Tax of Rs. 3,09,674 demanded from the appellant for providing buses to KSRTC under a specific contract. The appellant argued that the activity falls under 'Supply of Tangible Goods Service,' taxable from 16-5-2008, not 'rent-a-cab service.' They also claimed that part of the demand was time-barred and cited financial hardships.2. The appellant relied on a stay order in a similar case, while the JDR referred to findings of the original authority and a precedent case. The tribunal found no prima facie case for the appellant, stating that the activity of providing buses for hire charges to KSRTC likely falls under 'rent-a-cab service' as per the Finance Act, 1994, more specific than 'supply of tangible goods service' argued by the appellant.3. Despite the appellant's plea of limitation and financial hardships, the tribunal was not convinced at that stage, stating the latter was unsubstantiated. However, in a fair approach, the tribunal directed the appellant to pre-deposit 50% of the demanded Service Tax within six weeks, with waiver and stay subject to compliance.4. The tribunal's decision was based on the nature of the appellant's activity and the terms of the contract, indicating a likely coverage under 'rent-a-cab service.' The tribunal did not find merit in the appellant's arguments regarding limitation and financial hardships, ultimately directing a partial pre-deposit for waiver and stay of the penalty and the remaining Service Tax amount.This detailed analysis of the judgment highlights the key issues addressed by the tribunal, the arguments presented by both parties, and the tribunal's reasoning leading to the decision regarding waiver and stay of the demanded Service Tax and penalty.