Whether hiring of a vehicle for each trip where possession continues with the operator / owner and services are being provided only when asked, is taxable within the category of "rent-a-cab service".

Facts of the Case:

Appellant owns an Ambassador Car and two tempos. He is rendering the services of transporting. Revenue proceeded against the appellant for not discharging the liability under the category of 'Rent-a-Cab' operator

Decision:

The important thing to be noticed is that, the cabs were not leased out for any interval of time, for use by the client, according to its discretion. That service tax under the heading does not cover all manner of transport or vehicle hire services is clear from the wording of the heading itself. The levy has been defined as "any service provided.......by a rent-a-cab scheme operator in relation to renting of a cab". In the present case, there was no renting of cabs. Instead, transport service was provided. In view of this, service tax demand on the appellant is not sustainable. 

(Full text of judgment visit - 2008 -TMI - 2786 - CESTAT, BANGALORE and 2008 -TMI - 2803 - CESTAT, New Delhi)

Rent-a-cab service scope excludes per-trip transport where possession remains with the operator, affecting service tax applicability. The Chapter V charge applies to services by a rent-a-cab scheme operator relating to the renting of a cab; it does not cover all transport or vehicle-hire services. When possession remains with the operator and transport is provided only on a per-trip basis upon request, there is no renting of the cab to the client and such per-trip transport falls outside the scope of the rent-a-cab service for service tax purposes.