2024 (8) TMI 587 - AT - Service Tax

Transportation services to SEZ employees qualify as Rent-a-Cab Services, not Tour Operator Services, eligible for tax exemption under Notification 4/2004-ST.

M/s. MARS Transport Versus Commissioner of GST and Central Excise, Chennai III

CESTAT Chennai held that transportation services provided by appellant to SEZ company employees from residence to workplace constituted Rent-a-Cab ... Eligibility for the benefit of tax exemption under NN. 4/2004-ST dated 31.03.2004 - services provided to the SEZ unit. - Classification of services - Tour Operator Services or Rent-a-Cab Services - transportation of their employees from their residence to workplace - non-payment of service tax. Classification of service - HELD THAT:- From the nature of the services explained in the Show Cause Notice, as well as, in the Order-in-Original, it is seen that the appellant was transporting the employees of the SEZ company from their residence to the workplace. There was no planning, scheduling of the tour involved in the said transportation of employees. The nature of services would fall under Rent-a-Cab Services only. Moreover, the appellant has been paying service tax under Rent-a-Cab Services for transportation of employees of companies other than SEZ units. The first issue is held in favour of the appellant. Whether the appellant is eligible for benefit of exemption under N/N. 4/2004-ST dated 31.03.2004? - HELD THAT:- The said Notification uses the words ‘services consumed within SEZ’. In the present case, the service recipient is SEZ company. Though, the services have been provided partly outside the SEZ so as to facilitate the transportation of the employees from their residence to the workplace, it cannot be said that the services are not consumed within the SEZ. The issue stands covered by the decision in the case of ORIX AUTO INFRASTRUCTURE SERVICES LTD. VERSUS COMMISSIONER OF SERVICE TAX, MUMBAI I [2015 (11) TMI 346 - CESTAT, MUMBAI]. The Hon’ble High Court in the case of GMR AEROSPACE ENGINEERING LIMITED AND ANOTHER VERSUS UNION OF INDIA AND OTHERS [2019 (8) TMI 748 - TELANGANA AND ANDHRA PRADESH HIGH COURT] has categorically held that since Section 51 has an overriding effect, the exemption benefit cannot be denied by conditions imposed in a Notification. The appellant is eligible for the benefit of Notification No. 4/2004-ST dated 31.03.2004 - demand do not sustain - the impugned order is set aside - appeal allowed. Issues:1. Classification of services as Rent-a-Cab Services or Tour Operator Services2. Eligibility for exemption under Notification No. 4/2004-ST dated 31.03.2004Analysis:Issue 1: Classification of servicesThe appellant provided Rent-a-Cab Services to transport employees of an SEZ company from their residence to the workplace. The Department alleged the services were Tour Operator Services. The appellant argued that the services did not involve planning or scheduling typical of Tour Operator Services. The Tribunal agreed, holding that the nature of services fell under Rent-a-Cab Services, as evidenced by the appellant paying service tax under this category for other non-SEZ companies. The first issue was decided in favor of the appellant.Issue 2: Eligibility for exemption under Notification No. 4/2004-STThe Department denied the appellant the benefit of exemption under Notification No. 4/2004-ST, claiming services were not fully consumed within the SEZ. The appellant contended that even though services were partly provided outside the SEZ, they were consumed within the SEZ as the service recipient was an SEZ company. Citing relevant legal provisions and precedents, the Tribunal held that the services were indeed consumed within the SEZ. The Tribunal relied on the decision in the case of ORIX Auto Infrastructure Services Ltd. to support this conclusion. Additionally, the Tribunal referenced the judgment in the case of GMR Aerospace Engineering Ltd., emphasizing that the overriding effect of Section 51 of the SEZ Act prevents denial of exemption benefits by conditions in a Notification. Consequently, the Tribunal found the appellant eligible for the exemption under Notification No. 4/2004-ST. The demand was set aside, and the appeal was allowed with consequential reliefs, if any.This comprehensive analysis of the judgment highlights the key issues of classification of services and eligibility for exemption under the relevant notification, providing a detailed understanding of the Tribunal's decision and the legal reasoning behind it.