2010 (6) TMI 155 - AT - Service Tax

CESTAT AHMEDABAD: Service Tax Liability Set Aside for Distance-Based Services

The Appellate Tribunal CESTAT, AHMEDABAD, ruled in favor of the appellant, setting aside the Service Tax liability of Rs. 21,027. The Tribunal determined ... Rent-a-cab service- Appellant’s contention is that the services being rendered by them cannot be considered to be rent-a-cab services inasmuch as they were pro viding services to M/s. Torrent Powers on per kilometer basis. Held that- in the light of the various decision, agree with the contention that compensation in various months is varying. The same is indicative of the fact that it is being charged on per kilo meter basis. By applying the ratio of the above decision, such service cannot be held to be rent-a-cab service. Accordingly, set aside the impugned order and allow the appeal with consequential relief to the appellant. Issues:Service Tax liability for Rent-a-cab service without registration, returns, and payment.Analysis:The Appellate Tribunal CESTAT, AHMEDABAD, in the case, confirmed a Service Tax liability of Rs. 21,027 against the appellant for providing Rent-a-cab services to M/s. Torrent Powers without proper registration, filing returns, and payment of Service Tax from April 2003 to March 2007. The appellant argued that the services provided were not Rent-a-cab services as they were based on a per kilometer basis, citing precedents where similar services were not considered Rent-a-cab services. The appellant highlighted decisions like Noida Taxi Service v. CCE, Noida and R.S. Travels v. CCE, Meerut to support their contention.The legal issue at hand was whether the services provided on a per kilometer basis could be classified as Rent-a-cab services. The Tribunal noted that when services are rendered based on the length of the journey and payments are received per kilometer, they do not fall under the definition of Rent-a-cab services. The key point of contention was whether the appellant's services were indeed provided on a per kilometer basis. The appellant claimed to have only one self-driven cab, serving Torrent Powers, with charges varying based on the distance traveled, as evidenced by the show cause notice. The Tribunal agreed that the varying compensation indicated a per kilometer charging method, contrary to a fixed monthly rent characteristic of Rent-a-cab services.In light of the above analysis, the Tribunal set aside the previous order, ruling in favor of the appellant and granting consequential relief. The judgment emphasized the importance of the charging method in determining the classification of services as Rent-a-cab services, ultimately leading to the decision to allow the appeal and relieve the appellant of the imposed penalties.