High Court rules services under rent-a-cab scheme not taxable, contract of hire, not renting cab.

The High Court ruled that services under the rent-a-cab scheme were not taxable as there was no renting of the cab, only a contract of hire. The court considered the compulsory payments made by the assessee and the constitutional mandate under Article 265. Referring to previous judgments, the court dismissed the appeal, upholding the impugned order and emphasizing that the services rendered were not subject to taxation under the rent-a-cab scheme.

---

---

Issues: Taxability of services under the rent-a-cab scheme, Compulsory payments made by the assessee, Refund claim and passing on the burden to the consumer, Constitutional mandate under Article 265

In this judgment by the High Court, the primary issue revolved around the taxability of services under the rent-a-cab scheme. The court referred to a previous judgment where it confirmed the tax liability against the appellant. However, in the present case, the respondent had made payments under compulsion and promised to pay the remaining balance. The court considered the legal implications of such payments citing the Dunlop India Ltd. case and the Mafatlal Industries Ltd. case. The court noted that the department did not contest the claim made by the assessee regarding the payments. Additionally, the court emphasized Article 265 of the Indian Constitution, which prohibits the levy or collection of taxes except as provided by law. Despite the payments made by the assessee, the court held that there was no renting of the cab, only a contract of hire, and therefore, the services rendered were not taxable under the rent-a-cab scheme. Following the reasoning of a previous judgment, the court dismissed the appeal based on the lack of renting of the cab, thus upholding the impugned order.

---