2017 (9) TMI 1263

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....renting of motor vehicles to various corporate companies. Accordingly, show cause notice was issued to the appellant proposing to recover differential service tax liability of Rs. 1,06,69,008/- for the period October 2003 to March 2008 under rent-a-cab service. In adjudication, vide impugned order dated 24.6.2009, the Commissioner of Service Tax confirmed the proposal to demand the said amount along with interest and also imposed penalty of Rs. 1.50 crores under section 78 and Rs. 1,000/- under Section 77 of the Finance Act, 1994. Hence the appellants are before this forum. 3. Today, when the matter came up for hearing, ld. consultant Shri S. Ramachandran submits that the issue is no longer res integra and has been settled in favour of the....

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....ed below:- "18. A perusal of Clause 10 would re-enforce us in the view that we are taking that, under the rent-a-cab scheme, the hirer is endowed with the freedom to take the vehicle, wherever he wishes, and he is only obliged to keep the holder of the licence informed of his movements from time to time. When a person chooses to hire a car, which is offered on the strength of a permit issued by the Motor Vehicles Department, then the owner of the vehicle, who may or may not be the driver, will offer his service while retaining the control and possession of the vehicle with himself. The customer is merely enabled to make use of the vehicle by travelling in the vehicle. In the case of a passenger, he is expected to pay the metered charges, w....

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....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 to bear in mind that, in the case of hiring, the hirer may refuse to provide the service to the prospective customer. We cannot accept the argument of the learned counsel for the appellant that the Court must ignore the provisions of Section 75 of the Motor Vehicles Act. We are of the view that, when the lawgiver introduced this new source of taxation, it must be treated as h....