2015 (2) TMI 100 - AT - Service Tax

Tribunal rules service not rent-a-cab. Appeal allowed, tax demand unsustainable. Consequential relief granted.

Bangalore Metropolitan Transport Corporation Versus Commissioner of Service Tax

The Tribunal ruled in favor of the appellant, stating that the service provided did not qualify as rent a cab service. The impugned order demanding ... Rent a cab service - whether the service of providing buses on contract basis by the appellant to various factories and firms on monthly rental basis can be classified as rent a cab service or not - main business of the appellant is transporting of passengers with the city of Bangalore and nearby mofussil areas. - Held that:- Words used are services provided by a rent-a-cab scheme operator. Therefore firstly we have to decide whether BMTC can be considered as a rent-a-cab operator which according to the Finance Act means any person engaged in the business of renting of cabs. Apparently BMTC cannot be considered to be a person engaged in renting of cab service at all. The business undertaken by BMTC is to provide bus facility/transport facility to the citizens of Bangalore city and the main activity is running the buses in the city for the convenience of citizens and not a rent-a-cab scheme operation. We find that the definition itself excludes BMTC from the category of service providers. Appellant did not collect a monthly rent as observed by the Commissioner in his order. The charges are made on the number of kilometers actually run is multiplied by the amount fixed per kilometer. A rent-a-cab scheme a monthly rent is fixed and minimum number of kilometer may also be fixed crossing which the customer may have to pay extra. If the number of kilometers falls below the number and even if it is substantially low, yet the customers would be liable to pay the entire rent. That is not the case here. Moreover as submitted by the learned counsel even in such cases where buses are given on kilometer basis, passengers have to be picked up from various points and dropped destination as in the case of stage carriage. Further, we also find that the show-cause notice was issued in September 2011 and the demand relates to the period substantial portion what was taken is time-barred. - For the same reasons, imposition of penalties under various sections of Finance Act also cannot be sustained. Appellants have made out a strong case and we find that the impugned order cannot be sustained - Decided in favour of assessee. Issues involved:1. Whether the service of providing buses on contract basis by the appellant to various factories and firms on a monthly rental basis can be classified as rent a cab service or not.Detailed Analysis:1. The appellant, a transport corporation, was demanded service tax for providing buses to factories and firms for transporting employees and for special functions. The issue was whether this service qualified as rent a cab service. The appellant argued that they were not liable for service tax as the buses operated similarly to public transport buses and did not provide rent a cab service. The Department argued that providing buses to factories constituted renting buses, not stage carriage operations. The Tribunal noted the issue's narrow scope and decided to address it immediately without further delay.2. The legal provisions relevant to the case were discussed, including the definition of a cab, rent-a-cab scheme operator, and taxable services related to renting cabs. The Tribunal analyzed whether the appellant could be considered a rent-a-cab scheme operator engaged in the business of renting cabs. It was determined that the appellant's primary business was providing transport services to the public, not renting cabs. The agreement terms, where charges were based on actual kilometers run, did not align with typical rent-a-cab arrangements. The Tribunal also found that the demand for service tax was time-barred, and penalties were not sustainable. Previous judgments cited by the Department were not applicable to the appellant's situation.3. Ultimately, the Tribunal found in favor of the appellant, stating that the service provided did not qualify as rent a cab service. The impugned order demanding service tax was deemed unsustainable, and the appeal was allowed in favor of the appellant. The Tribunal provided consequential relief to the appellants based on the decision.In conclusion, the judgment analyzed whether the appellant's bus services to factories and firms constituted rent a cab service, considering legal definitions and previous judgments. The Tribunal ruled in favor of the appellant, determining that the service provided did not fall under the category of rent a cab service, leading to the appeal being allowed with consequential relief.