Home Case Index All Cases Service Tax Service Tax + AT Service Tax - 2015 (1) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (1) TMI 282 - AT - Service TaxRent a cab service - Joint agreement - private entrepreneurs supply the buses under hire scheme for operation on the identified intra and inter-state route to Andhra Pradesh State Road Transport Corporation (APSRTC) - Restriction on hire - Buses with stage carriage permit cannot be hired - Interpretation of definition of 'rent a cab service' - Imposition of penalty - Held that:- appellants who provide the buses are paid on the basis of number of kilometers run per day in the permitted route as per the stage carriage system. Even if the bus runs empty and no passenger travels, APSRTC is bound to pay the amount agreed upon between the two parties per kilometer. Similarly even if the bus runs with double the capacity of passengers and APSRTC makes huge profit, the appellants do not get any benefit whatsoever. In fact the agreement provides that even in case the conductor is not provided by the APSRTC, the driver is required to collect the fare from the passengers but the learned counsel for the appellants did not show any clause where APSRTC is required to make any payment for absence of the conductor. Therefore whatever be the situation, the appellants get only the payment agreed upon per kilometer and nothing more. The nature of agreement here is very very clear that this is not a joint operation. In fact the agreement is one sided. Para 11 (i) provides that in case of any dispute or disagreement between the owner and the officers of the Corporation with regard to the interpretation of the terms and conditions of this agreement, penalties or fines, amounts due, the decision of the Regional Manager of the Corporation shall be final. Here the person who is taking the vehicle determines the dispute between the two parties also. We are unable to understand how this can be considered as joint operation. In this case if the contract between APSRTC and the appellants was illegal and contrary to law, it was for the authorities who enforce Motor Vehicles Act 1988 to take action and ensure that the stage carriage permit issued to the appellants is withdrawn and appellants are visited with penalty, if any, imposable under the law. Apparently State Transport Authorities have not taken any such action. It is not for us to examine this aspect. Our examination has to be limited to examine the facts of case and agreement to arrive at the nature of transaction between the parties to see whether the transaction is covered by the definition of service or not. In fact the agreement itself provides that APSRTC emblem would be embossed on the vehicle. Hiring or renting 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. Difference between hiring and renting - Held that:- 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. - Where a definition is exclusively meant for motor vehicles which can be hired or rented, the definition itself provides for it. Therefore when words like maxi cab and motor cab are used it means it is applicable only to vehicles which are meant for hire or reward. - even under Motor Vehicles Act legislative intention is that rent and hire or reward are interchangeable. - 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. - Decided against the assessee. Decision of High Court of Uttarakhand in the case of Sachin Malhotra and others [2014 (10) TMI 816 - UTTARAKHAND HIGH COURT] - Held that:- 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 which can carry more than 12 passengers and which cannot be called as motor cab and maxi cab after 1/6/2007. - Therefore it would not be correct to apply the decision of the Hon’ble High Court to the present case. - Decided against the assessee. Demand of service tax confirmed for the period 1/6/2007 onwards - levy of penalty waived - Matter remanded back for quantification - Decided partly in favor of assessee.
|