2024 (11) TMI 994 - AT - Service Tax

Rent-a-cab service tax case remanded after tribunal finds extended limitation period unsustainable despite taxable services

CESTAT Ahmedabad set aside the original order in a service tax case involving rent-a-cab services. The appellant had not paid service tax on vehicle ... Service Tax demand under the category of rent a cab service, interest and imposition of penalty - invocation of extended period - HELD THAT:- We find that the issue involved in the instant case relates to the appellant’s understanding with respect of hiring of vehicles. The appellant was under the impression that hiring of vehicles does not fall under the category of renting of cab service, and therefore, the appellant was not discharging service tax in respect of vehicles hired by them. We hold that while service provided by the appellant is taxable, the Notification of extended period of limitation cannot be sustained. The impugned order is therefore, set aside and matter remanded to the original adjudicating authority for decision in light of above findings. Issues:Demand of Service Tax, interest, and imposition of penalty on M/s Twin Travels for the period 01.04.2011 to 31.03.2016 under the category of rent a cab service.Analysis:The appeal was filed against the demand of Service Tax, interest, and penalty. The appellant contended that the issue was covered by a decision of the Hon'ble High Court of Gujarat in a specific case. The appellant argued that the hiring of vehicles did not fall under the category of renting a cab service, based on their understanding. The Hon'ble High Court of Gujarat's decision in the mentioned case was referred to, highlighting the definition of 'rent' and 'hire' to support the appellant's position. The Tribunal considered the appellant's understanding regarding the hiring of vehicles and the distinction between renting and hiring as per legal definitions. The Tribunal emphasized that the service tax is applicable to services involving both hiring and renting of cabs for an extended duration. The Tribunal disagreed with the appellant's argument that only exclusive control over vehicles should be taxed, citing the intention of the Government to tax service providers in such scenarios.The Tribunal concluded that the service provided by the appellant fell under the category of rent-a-cab service and was subject to service tax. However, the Notification of extended period for levying service tax was found unsustainable. The matter was remanded to the original adjudicating authority for further decision based on the Tribunal's findings. The Tribunal agreed with the Tribunal's decision that there was no deliberate suppression or mala fide intention on the part of the appellant, considering the recent inclusion of the service under the tax net and prevailing ambiguity.The Tribunal's decision highlighted the importance of understanding the nature of services provided and the legal definitions of renting and hiring in determining the applicability of service tax. The judgment emphasized the need to interpret the taxing statutes in line with the intention of taxing certain services contributing to the Gross Domestic Product. The Tribunal's decision provided clarity on the taxation of services involving both hiring and renting of vehicles, ensuring compliance with the tax regulations.