TaxTMI 
TaxTMI 
2015 (1) TMI 282
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....3, ST/25087/2013, ST/25088/2013, ST/25520/2013, ST/25573/2013 to ST/25575/2013, ST/25577/2013 to ST/25580/2013, ST/25582/2013, ST/25584/2013, ST/25635/2013, ST/25636/2013, ST/25649/2013 to ST/25652/2013, ST/25775/2013, ST/25777/2013 to ST/25779/2013, ST/25897/2013, ST/25898/2013, ST/25900/2013 to ST/25902/2013, ST/25908/2013 , ST/25911/2013, ST/25950/2013, ST/25952/2013, ST/26769/2013, ST/27067/2013, ST/27079/2013 to ST/27081/2013, ST/27084/2013, ST/27085/2013, ST/27126/2013 to ST/27129/2013, ST/27131/2014, ST/27134/2013, ST/27140/2013, ST/27141/2013, ST/27297/2013, ST/27315/2013, ST/27316/2013, ST/27398/2013 to ST/27416/2013, ST/27466/2013 to ST/27469/2013, ST/27475/2013, ST/27476/2013, ST/27479/2013, ST/27480/2013, ST/27482/2013, ST/27485/2013, ST/27486/2013, ST/27488/2013, ST/27490/2013, ST/27493/2013, ST/27561/2013, ST/27665/2013, ST/27666/2013, ST/27822/2013, ST/27823/2013, ST/27824/2013, ST/27889/2013, ST/27890/2013 , ST/27891/2013, ST/27892/2013, ST/28016/2013, ST/28017/2013, ST/28018/2013, ST/28019/2013 , ST/28020/2013, ST/28065/2013, ST/28067/2013, ST/28068/2013, ST/28069/2013, ST/28070/2013 , ST/28071/2013, ST/28072/2013, ST/28073/2013, ST/28075/2013, ST/28097/2013 to ST/....
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....e for all the claims that may arise due to statutory violations out of the operations. d) The corporation as per Para 4(v) of the agreement agrees to pay the owner the agreed rate of per operated KM. e) The owner would submit the bills for payment to the Road Transport Authority based on the distance operated during respective period. f) The corporation only agrees to reimburse the fine, compounding fees etc., imposed by the Court, RTA or STA against the permit holder under Section 86 of Motor Vehicles Act when the vehicle has plied for the corporation. g) That as per the agreement the APSRTC has the right to collect fare on passengers and luggage etc., h) The owner is contractually required to maintain vehicle log book i) It is also agreed that the corporation would have the right to fix up the timings enroute and the owners shall ply the vehicle on the schedule of timings furnished by the corporation. [Clause 9] j) The owner would also be liable for the penalties imposed by the Corporation for the violations identified in the Agreement at Annexure-I [Clause 10 (i)] k) The owner/family members cannot indulge in operation of their other vehicles as contract ....
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....14 SCC Online Utt 1855 wherein it was held that unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under Section 65(105) (o) read with Section 65(91) of the Finance Act, 1994. 5.1.4. Learned counsel on behalf of the appellants relied upon paragraphs 36, 37 and 38 of the tender forming the basis for agreement entered into between the APSRTC and the appellants to submit that these terms show the nature of the contract and it comes out clearly that it is a joint operation. The relevant paragraphs of the tender are as under: 36. The entrepreneur has to operate the bus on the route allotted. 37. The entrepreneur shall not allow operation of any other bus owned by him/her or belonging to his/her family members illegally on the notified routes infringing the monopoly of Corporation and in case of violation, he /she is liable for action which includes termination of agreement. 38. The entrepreneur or his/her family member shall n....
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....is in the nature of parties jointly providing 'stage carriage service' to individual commuters and the service of transportation is not provided to the hirer of the vehicle by the owner which is distinguishable from all the other cases considered by the Courts. We have already discussed and considered and came to the conclusion that this is not a joint operation. In terms of Para 8(ii), the owner is required to emboss the APSRTC emblem on side of the vehicle at their cost. The owner is required to keep the RC book of the Corporation and the Corporation will issue a certificate issued by RTA in lieu of RC book and the RC book will be given to the owner of the vehicle for a period of 3 days in a quarter. These two clauses in the agreement clearly show that as far as the public is concerned, stage carriage service is provided only by APSRTC. From the agreement, clauses of the agreement and the terms used in the agreement, it is quite clear that both the parties to the agreement make it known to the public at large who are not aware of the intricate parts of the agreement that bus running in the route with the stage carriage permit is run by APSRTC. This is another reason why we cannot....
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....SRTC proposes to hire buses of private operators to ply on notified routes, routes covered by draft schemes or on any route coverage by a permit either pacca or temporary issued by either STA or RTA'. In the tender document also, the heading reads 'tender schedule for hiring of private buses under hire scheme.In fact in the invitation for application from private entrepreneurs it is specifically said that proposal is to hire buses under hire scheme for operation on the identified intra and inter-state routes. The very fact that the tender is for intra as well as the inter-state routes, would also lead to a conclusion that APSRTC authorities were clear that not only the provisions of State enactment/rules framed under Motor Vehicles Act but even the other State enactments and Rules did not bar such an agreement. 5.2.3. Even though it was submitted during the hearing as well as in the written synopsis that hiring or renting is legally impossible independent of the permit, no specific provision under the Motor Vehicles Act 1988 was quoted. A brief perusal of the conditions that may be attached by the Road Transport Authority while granting stage carriage permit does not reveal any ....
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....ns shall be used: Provided that the attachment of this condition to a permit shall not prevent the continued use, for a period of two years from the date of publication of the approved specifications, of any vehicle operating on that date; (xi) that specified standards of comfort and cleanliness shall be maintained in the vehicles; (xii) the conditions subject to which goods may be carried in the stage carriage in addition to or to the exclusion of passengers; (xiii) that fares shall be charged is accordance with the approved fare table; (xiv) that a copy of or extract from, the fare table approved by the Regional Transport Authority and particulars of any special fares or rates of fares so approved for particular occasions shall be exhibited on the stage carriage and at specified stands and halts; (xv) that tickets bearing specified particulars shall be issued to passengers and shall show the fares actually charged and that records of tickets issued shall be kept in a specified manner; (xvi) that mails shall be carried on the vehicle subject to such conditions (including conditions as to the time in which mails are to be carried and the charges which may be le....
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....of cab should be understood to mean that a customer is merely enabled to make use of the vehicle by traveling in the vehicle for the periods provided in the agreement. In fact the agreement entered into between the appellants and the APSRTC is quite clear that APSRTC is hiring the vehicles which have stage carriage permits in the routes specified and they are required to run according to the timings specified by APSRTC. In these cases the intention of hiring the buses itself is to run them as stage carriages in terms of the agreement. After renting or hiring a cab, what should be done with them and how to use them is covered by the terms of the agreement and that is clearly available in the agreements. So long as the agreement provides for utilization of the rented or hired vehicle for the purpose for which it is being used and both the parties understand it as hiring, we cannot import any other meaning from elsewhere. The submission that meaning of 'hiring or renting' is mere enablement of the customer for traveling in the vehicle only, in our opinion, does not emerge either from the agreement or from the law. 5.4. Difference between contract carriage and stage carriage 5.4.....
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....in the name of permit holder on their account. Nevertheless as we have already observed vehicle has been hired and agreement has been drafted in such a manner that while the vehicle remains hired, the provisions of Motor Vehicles Act are not violated and agreement is not in contravention of the provisions of Motor Vehicles Act. 5.6. Difference between hiring and renting 5.6.1. The appellants relied upon the provisions of Section 72 of Motor Vehicles Act to submit that vehicles can be used only in a certain area in a certain route, and subject to other conditions imposed therein. We have already considered the issue and taken note of the fact that the agreement has been drafted in such a manner that the provisions of Motor Vehicles Act are not violated. Lot of stress was laid on the observations of the Hon'ble High Court of Uttarakhand that under rent-a-cab service, two essential requirements are to be fulfilled namely vehicle can be operated anywhere and there should be no restriction and the hirer or the person who had rented the cab should be able to use it whenever and wherever he requires the vehicle. It was submitted that both these aspects are not fulfilled in this case....
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....or adapted to carry not more than 6 passengers excluding the driver for hire or reward. According to Section 2(26) 'motor car' means any motor vehicle other than a transport vehicle, omnibus, road-roller tractor, motor cycle or invalid carriage. According to Section 2(27) 'motor cycle' means two-wheeled motor vehicle, inclusive of any detachable side-car having an extra wheel, attached to the motor vehicle. According to Section 2(29) 'omnibus' means any motor vehicle constructed or adapted to carry more than 6 persons excluding the driver. As can be seen from the definitions given above, prior to the year 2007, the rent-a-cab service was applicable only to cabs and maxi cabs. Finance Act 1994 did not define a motor cab or a maxi cab. It also simply said that rent a cab scheme operator means any person engaged in the business of renting of cabs. Rent-a-cab as such was not defined. In such a situation two views are possible. One view that is possible is that the meaning of rent-a-cab expression has to be taken as understood in common parlance. Otherwise the provisions of Section 75 which explains the scheme for renting of motor cabs can be taken into account for the....
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....Section 75 of Motor Vehicles Act does not cover both maxi cab, motor car and omnibus. Therefore even if we take a view that because the word cab prefixed by motor and maxi is still a cab and therefore the definition of rent-a-cab scheme of Motor Vehicles Act can be applied even if specific exclusion or inclusion is not made, after 2007 it becomes very clear that the intention of the law makers for the purpose of levy of service tax was not to follow rent-a-cab scheme envisaged in the Motor Vehicles Act. Therefore two views are possible regarding this issue prior to 1/6/2007 but not after 1/6/2007. 5.6.6. Therefore without considering the judicial precedents or decisions when we consider the legal provisions independently, a conclusion that arises is that the law makers for the purpose of levy of service tax did not contemplate application of rent-a-cab scheme as envisaged in Motor Vehicles Act for the purpose of levy of service tax. 5.6.7. This conclusion is further re-enforced by the proviso to the meaning of cab under Section 65 (20) of Finance Act 1994 which provided that the maxi cab referred to in sub-clause (ii) or Motor Vehicle referred to in sub-clause (iii) which is ....
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....ct 1994 is nonexistent. ii. The words rent and hire have been used interchangeably. iii. By adding maxi cab and motor vehicles with capacity to carry more than 12 passengers, Finance Act 1994 clearly deviates from the Motor Vehicles Act which makes rent-a-cab scheme applicable only to motor cab and motor cycles and does not even cover maxi cabs leave alone motor vehicles equivalent of omnibuses. iv. The fact that the definition includes provision for exclusion of certain type of rent-a-cab operations from the purview of service tax also shows that there is no intention to apply rent-a-cab scheme under Motor Vehicles Act to Finance Act 1994. v. Prior to 1/6/2007 two views are possible. This conclusion is supported by the fact that Honourable High Court of Uttarakhand concluded that rent a cab scheme envisaged under the Motor Vehicles Act was intended to be applied for rent a cab service. 5.7. Decision of High Court 5.7.1. However the learned counsel on behalf of the appellants laid heavy stress on the fact that Hon'ble High Court of Uttarakhand in the case of Sachin Malhotra and others had considered this issue and had taken a view that the legislature while drafti....
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....sons desiring to drive either by themselves or through drivers, motor cabs or motor cycles for their own use and for matters connected therewith. (2) A scheme made under sub-section (1) may provide for all or any of the following matters, namely; (a) licensing of operators under the scheme including grant, renewal and revocation of such licences; (b) form of application and form of licences and the particulars to be contained therein; (c) fee to be paid with the application for such licences; (d) the authorities to which the application shall be made; (e) condition subject to which such licences may be granted, renewed or revoked; (f) appeals against orders of refusal to grant or renew such licences and appeals against orders revoking such licences; (g) conditions subject to which motor cabs may be rented; (h) maintenance of records and inspection of such records; (i) such other matters as may be necessary to carry out the purpose of this section. 17. In terms of Section 75, a scheme has been framed by the Government, which is called Rent A Cab Scheme, 1989. It contemplates the licensing of the operator; the making of an application for the licence;....
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....noted, the word 'hire' is used even in the rent-a-cab scheme. But, what is of fundamental importance and constitutes the distinguishing feature between 'rent-a-cab' and hiringis that, in the case of 'hiring', undoubtedly, the owner of the vehicle retains control and possession; he either drivers the vehicle himself or employs somebody else to drive the vehicle; and the customer merely makes use of the vehicle by traveling in the vehicle on the basis of a contract that he will pay the requisite hire charges for the period he uses the vehicle. Unlike the same, in the case of rent-a-cab, as is provided in the Motor Vehicles Act, the person is enabled to take the vehicle with him wherever he pleases, subject, no doubt, to the terms of the contract between the parties and he uses the vehicle as his own subject to his paying the rent. Though both, rent and hire, may, in a different context, have the same connotation; in the context of rent-a-cab scheme and hiring, we are of the view that they signify two different transactions. What the lawgiver has chosen fit to tax by way of imposition of service tax is only transaction relating to business of renting of cabs. It is also pertinent t....
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.... all. Ongoing through the agreement we find that there is absolutely no provision anywhere that hirer, the APSRTC, cannot direct the driver of the vehicle which they have hired to be rented as a stage carriage to go elsewhere or take a different route. The agreement even provides for the consequences of such actions to be suffered by the APSRTC and not by the stage carriage owner. While there are specific restrictions on the hirer of the vehicle that he cannot run the vehicle anywhere else, he cannot run a contract carriage and his family members cannot compete with the APSRTC, APSRTC is free and there are no restrictions on the activities of APSRTC as far as the vehicle is concerned. It has to be noted that the travel is under the control of the hirer for some purpose but as far as the vehicle is concerned, it has to be according to the permit and whatever amount is collected from the passengers belongs to APSRTC. Even if APSRTC cannot provide a conductor, the driver is expected to collect the fare and hand it over to APSRTC. 5.7.3. Clause (v) of Clause 6 of the agreement provides as under: The Co....
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....e agreement would show that APSRTC is free to put up advertisements on the hired buses; APSRTC is free to run the vehicle wherever they want; whatever amounts collected as fare are to be paid to the APSRTC only; the owner has no share in the advertisement revenue; he or his family members cannot compete with APSRTC; cannot own contract carriages and cannot run travel agencies. These clauses show that it would not be appropriate to follow the decision of the Hon'ble High Court blindly without looking into the agreement and what emerges from the agreement. 5.7.6. As already mentioned earlier the agreement nowhere used the word 'rent' but in every place used the word 'hire'. The Hon'ble High Court's observation in paragraph 18 that in the case of hiring the hirer may refuse to provide the service to the prospective customer is also true in the present case. There is no restriction on APSRTC as to what they can do and what they cannot do with the hired vehicles except that they have to take the legal consequences. 5.7.7. Hon'ble High Court was considering the issue for the period prior to 1/6/2007. As mentioned earlier, the definition was amended to include motor vehicles whic....
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...., w.e.f. 01.06.2007, service tax would be applicable on renting of buses under the category of 'rent-a-cab service'. As regards the earlier period (prior to 01.06.2007), mere renting of bus in this manner was not taxable under business auxiliary service or any other taxable services as existed during that period. This is a clarification issued when the amendments were made and therefore this is an interpretation of the Government when the tax was introduced. It can be considered as contemporanea exposito and hence has persuasive value. It can be seen that our view is also same. 5.8.3. Learned AR also relied upon the decision in the case of CCE, Chandigarh Vs. M/s. Kuldeep Sing Gill [2010-TIOL-436-HC-P-H-ST] but this decision was considered by the Hon'ble High Court of Uttarakhand. In any case we have already differentiated the decision in the case of Hon'ble High Court of Uttarakhand without considering other decisions and therefore in our opinion we need not elaborately discuss other decisions cited by the AR. 5.9. Purpose mentioned in the Registration certificate Arguments were also presented about purpose of vehicle used incorporated while doing registration. We have al....