2018 (9) TMI 179 - AT - Service Tax

Tribunal rules in favor of appellants on service tax levy dispute

C.C.E. & S.T., Surat-ii Versus Amin Travels, Sanghi Finance & Investment Ltd., Shree Amarshakti Travels (Vice-Versa)

The Tribunal ruled in favor of the appellants, holding that the levy of service tax on rent a cab service was not justified for contracts predating the ... Levy of service tax - rent a cab service - business of renting of jeeps/ cabs to M/s ONGC Ltd. Ankleshwar - Held that:- There is no dispute that the appellant have provided vehicles on rent basis under a contract to M/s ONGC Ltd., therefore, it clearly falls under the head of rent a cab service. Moreover, the appellant on their own started paying service tax from 2002 onwards. The levy of service tax on rent a cab is legal and proper. Extended period of limitation - Held that:- The appellant could not pay the service tax under a bonafide belief - the demand for the extended period is not sustainable. Appeal allowed in part. Issues Involved:Levy of service tax on rent a cab service, applicability of service tax on contracts pre-dating taxable period, time-barring of demand for extended period, bonafide belief of appellant, applicability of penalty under Section 78, interpretation of similar judgments in rent a cab service cases, maintainability of Revenue's appeals based on amount involved.Analysis:1. Levy of Service Tax on Rent a Cab Service:The common issue in all appeals was the levy of service tax on rent a cab service provided by the assessees to M/s ONGC Ltd. The service was categorized under 'rent a cab scheme operators service' and deemed liable for service tax from 01.04.2000. The assessees did not discharge the service tax, leading to issuance of show cause notices (SCNs) and subsequent confirmation of service tax demand with penalties.2. Applicability of Service Tax on Contracts Pre-dating Taxable Period:The counsel for the assessee argued that since the contracts for renting vehicles were from 1999 when the service was not taxable, demanding service tax based on these contracts was unjustified. They contended that the demand for the extended period was time-barred due to the absence of provisions for service tax in the contract with ONGC, leading to a bonafide belief that service tax was not payable.3. Time-Barring of Demand for Extended Period and Bonafide Belief of Appellant:The appellant's counsel highlighted the arbitration proceedings regarding service tax payment, establishing a bonafide belief that service tax was not due. They referenced judgments supporting the contention that extended period demands were not sustainable in cases where there was no suppression of facts.4. Interpretation of Similar Judgments in Rent a Cab Service Cases:The Tribunal examined the legal precedents cited by both parties, notably the judgment of the Hon'ble Gujarat High Court in a similar case, to determine the applicability of the extended period for demanding service tax. The Tribunal found that the demand for the extended period was not sustainable based on the facts of the case and the legal interpretations provided by the cited judgments.5. Applicability of Penalty under Section 78:The Tribunal considered the absence of suppression of facts by the assessees as a ground for setting aside the penalty under Section 78. The judgment emphasized the importance of bonafide belief and lack of fraudulent intent in the non-payment of service tax.6. Maintainability of Revenue's Appeals Based on Amount Involved:The Tribunal dismissed the Revenue's appeals concerning demands less than 20 lakhs in accordance with the Government's litigation policy, which prohibits appeals for amounts below the specified threshold. This decision was made without delving into the merits of the Revenue's appeals.This comprehensive analysis of the judgment addresses the key legal issues involved in the case, providing a detailed overview of the arguments presented, the Tribunal's findings, and the legal principles applied in reaching the decision.