TMI Blog2012 (5) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the category of Rent-a-Cab services, as per the definition enshrined at Section 65 (91) of the Finance Act, 1994. - Decided in favour of the assessee. As regards the question of limitation, Held that the issue involved was really in dispute and various Benches have been holding that the activities being conducted by the appellant herein would not fall under the category of Rent-a-Cab Services and hence the bonafide impression carried by the appellant could not be faulted with. - ST/212/06 - A/362/WZB/AHD/2010 - Dated:- 20-3-2012 - Archana Wadhwa, B S V Murthy, JJ. For Appellant: Shri Devan Parikh, Adv Shri V. Kansara, Adv For Respondent: Shri J S Negi, SDR Per: B S V Murthy (For Bench): In view of the majority order, the confirmation of demand and penalty imposed on the appellant are set aside, thereby the impugned order is set aside on merit as also on limitation. (Archana Wadhwa) Member(J) (B S V Murthy) Member (T) Per: B S V Murthy: Dated: 9.11.2010 The assessee is engaged in the business of providing services of tour operator and rent-a-cab scheme operator as defined under Section 65 of Finance Act, 1994. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the appellants do not fall within the definition of tour operator and therefore the demand cannot be sustained. He relied upon the decision of the Hon'ble High Court of Madras in the case of Federation of Bus Operators' Association of Tamilnadu reported in 2001 (134) ELT 618 (Madras.) which has been upheld by the Hon'ble Supreme Court as reported in 2003 (157) ELT A 144 . It was held in para 36 of the order of the Hon'ble High Court that if the vehicle does not satisfy the definition of tourist vehicle within the meaning of Section 2(43) of the Motor Vehicles Act, such a person would not be required to be registered at all. 4. We find considerable force in the arguments advanced by the learned advocate. During the relevant period, the definition of tour operator was as under: Tour operator means any person engaged in the business of operating tours in a tourist vehicle covered by a permit granted under the Motor Vehicles Act, 1988 (59 of 1988) are the rules made thereunder . 5. Perusal of the contract and the submissions made by the learned advocate and also in terms of the decision of the Hon'ble High Court of Madras, unless the department is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill straightaway be covered under Section 65(52) of the Finance Act. Such petitions, where the permits are under section 88 (9) of the Motor Vehicles Act, would be straightaway liable to be dismissed and are dismissed as such . Para 24 A plain reading of the provisions of the Motor Vehicles Act says that any such vehicle whish answers the description of the tourist vehicle under Rule 128 and which would run under a contract would become a tourist vehicle and once it becomes a tourist vehicle so long as it is being used under any permit under the Motor Vehicles Act, by a person who is engaged in the business of operating the tours then, the requirement of the Finance Act would be complete. In as much as the petitioner is a contract carriage operator and not a stage carriage operator, the observation of the Division Bench in respect of spare buses of stage carriages is not applicable. It is also relevant to refer once again the observation in Para 41 ...In fact, the most of the petitioners, who are having the contract carriage, are having the permits under Section 88(9) of the Motor Vehicles Act read with Section 82, which are nothing but tourist tourist permits issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to M/s. ONGC and the same are at the disposal of ONGC and can be used for going to any place. Assessee gets the payment on the basis of the time, duration as well as mileage. It was submitted that appellants do not have a rental agreement with ONGC at all but the agreement was a hiring agreement only. Where the vehicles are hired out, the rent-a-cab operators service cannot be said to have been rendered. The meaning of the word 'rent' denotes possession of the property with the person who has taken the same for usage. In this case possession of the vehicles remained with the contractor including the duration of duty hours. Whenever trips were required to be undertaken the driver of the contractor was asked to carry out the same and appellant was paid per km as agreed in the contract. As per clause 6.4 of the contract the duty timing was 12 hours per day which means the vehicles were required to be placed only for 12 hours per day. If the contract was for rent, vehicle should have been rented out for a particular span of time. He relied upon the decision in the case of M/s. Kuldeep Singh Gill Vs. CCE Jalandhar reported in 2006 (3) STR 689 (Tri. Del.) and also this Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/1999-2000/1375 dated 17.05.2000 for providing initially 14 Nos. of Car/taxis on monthly basis of Model 1998 or latest or later on here for use within limits of Ankleshwar/Gandhar Project. Schedule of Rates: 1. Minimum fix charges per vehicle per month upto a total run of 2400 km. -Rs.________ 2. Rate per Km. run beyond 2400 km. per vehicle -Rs. 3.25 3. Overtime charges per hour beyond 12 hrs. duty per day. -Rs. 30.00 4. Out station allowance (if any) for driver if the car is detained over night. -Rs.100.00 Note: Four days in a calendar month per vehicle shall be allowed for maintenance purpose with prior adjustment and permission of user. For such absence NO WORK NO PAYMENT condition or PRO RATA DAY RATE BASIS is applicable and no penalty will be charged on that day. In case any of the vehicle(s) supplied by the contractor runs below the monthly fixed kilometers in any month, the difference between the kms. fixed and actual run by such vehicle(s) will be deducted from the tot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be covered under the said service category In this case payment is per vehicle per month subject to variation depending upon extent of use. 11. In the case of Dharmabhakti Travels cited by the learned DR, the matter was remanded to consider the issue after considering the contract between the parties. In fact in that case it was observed that when the distance actually run in a month is less than what is specified and even in such cases if the service receiver is required to provide a fixed amount the service would amount to rent-a-cab service. In this case it is precisely the case that even if the distance travelled is less than the minimum fixed for the 14 vehicles rented out to ONGC, ONGC is required to pay a fixed amount. After considering the relevant clauses, the obvious conclusion that emerges is that this is nothing but a contract for providing rent-a-cab service. As regards the decision of the Tribunal in the case of Kuldeep Singh Gill relied upon by the learned advocate, we note that on an appeal filed by the Revenue, Hon'ble High Court of Punjab Haryana, the order of the Tribunal was set aside as reported in 2010 (18) STR 708 (P H). 12. The Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... down the duties and responsibilities of hirers of motor cabs, indicating thereby that Motor Vehicles Act, 1988 itself does not make a distinction between rent and hire. While interpreting a taxing statute the words should be given the same meaning as is understood by the persons in that trade. The appellant have not produced any evidence to suggest (either a contract entered between the customer and the service provider or the conditions of hire/rent etc.) that the car is actually hired by the customer and not rented in their case. Semantics apart, I do not see much of a difference in the words Hire Rent in the context in which they are used. The Rent-a-Cab Scheme would have consistently used the word 'Rent' 'Rental charges' etc. instead of 'hire' 'hire charges' if there is such a big difference between the two expressions. An 'Yellow Black' motor taxi is engaged by a person whereas he hires a tourist taxi much more formally for a longer duration. The Government's intention is to tax the providers of a service, which involves, hiring/renting of a cab formally for a longer duration. While I agree with the appellants' contention th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to arbitration (sentence reproduced as in the letter). There is no explanation from the appellants as to what steps they took thereafter till show cause notice was issued. Obviously the department had written to the appellants and appellants were made aware of their liability in the year 2002 itself. Inspite of this, till the search took place on 07.07.04 and till date, the appellants have not made any efforts to find out the correct position as per law. By the time they took registration it was already two years they were providing service and there is no indication as to what efforts were made by them to find out whether they are liable or not. There is no evidence to show that appellants filed ST-3 returns which they were required to do after obtaining registration. If they were to file ST-3 returns indicating the amounts received, the department could not have invoked suppression of facts at all. This is a clear case of suppression of facts by the appellants and therefore the invocation of extended period has to be upheld. 14. Since there is no clear segregation of the liability of service tax on tour operator service and rent-a-cab service in the show cause notice or in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced by Learned Member (Technical). 6.13 The contractor shall make his own arrangements for safety and security as well as parking/safe keeping of fleet of his vehicles. 6.18 Already produced by Learned Member (Technical). 6.19 In case any vehicle is withdrawn from the duty on any day by the contractor for any reason except on orders from the DGM(LGTS) on becoming defective/off road to provide proper substitute vehicle for defective one or if the vehicles provided are not as per the specifications and requirement and hence not acceptable of if the contractor fails to provide correct number of vehicles in accordance with the standing work order or does not provide after withdrawal, no payment shall be made to the contractor for that day against that vehicle and ONGC shall have the right to make alternative arrangements at the risk and cost of the contractor. Any additional expenditure incurred by the ONGC in making alternative arrangement shall be recovered from the contractor's bills. In addition to this, L.D./compensation will be imposed for not supplying/ withdrawing the vehicle as per the L.D. clause as mentioned hereunder. In case of replacement vehicle(s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e contractor shall be responsible to provide suitable replacement at his cost. 12.1 Already produced by Learned Member (Technical). 12.2 The rates in the schedule of rates should include all the expenses statutory or incidental on account of POL, drivers/crew, wages, taxes to RTO, Insurance premium, any other State or Central Gout payments, Repairs and Maintenance of vehicles or any other expenses incurred by the contractor for performing under this contract. ONGC shall not be liable to pay any charges other than the amount as per schedule of rates or specifically mentioned under any other clause of the contract. However, for sending the vehicle to other states any additional expenses like entry tax to visiting state, if any, shall be reimbursed by the ONGC as per actuals on production of receipts. 13.1 The contractor shall submit monthly bills in TRIPLICATE about the hire charges. The monthly bills must be accompanied by an ORIGINAL + DUPLICATE log sheets/pages completed fill in all relevant columns/ entries and the statement attached to bill should give such details as total kilometers covered, days/shifts of absence and L.D thereof, total amount claimed and non-ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, depending upon the exigencies of ONGC work, for which no other extra charge on account of additional expenditure shall be paid by them. Further, Clause 6.4 makes it clear that the vehicle would be provided normally for 12 hours duty in a day. The hiring charges are to be calculated for the actual number of working days on pro-rata basis. ONGC reserves the right to reject any or all the offers or to accept any offer in part or full without assigning any reason. Vehicles are supposed to report to duty every day in the morning with sufficient fuel and if the fuel is not sufficient to run 500 kilometers in a day, the time consumed by vehicle for re-fueling will be on the contractor's account. The contractor shall make his own arrangements for safety and security as well as parking and safe keeping of fleet of his vehicles. Similarly, in Clause No.6.18, the contractor is required to maintain the vehicle in absolute working order. He is responsible to immediately replace the vehicle, if the same has developed some defect while on duty. The alternative arrangement can be made by ONGC at the cost of contractor and in such case, the additional expenditure incurred, if any, will be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ours a day with all responsibilities being on the shoulders of contractor. Even the vehicle was required to be at the door-steps of ONGC with sufficient fuel to run for a distance of 500 kilometers. If the vehicle would have been given on rent, the fueling of the same along with requisite repairing and maintenance would have been with the person who takes the vehicle on rent. As such, I am of the view that the contract clauses clearly reflect upon the fact that the vehicle was hired and not on rent. 5. At this stage, I would like to comment upon the payment clause as contained in Clause 13 of the contract. Various clauses reproduced above, reflects one thing that the contractor is required to maintain a proper log book duly signed by the officer using the vehicle. At the end of the month, he is required to prepare bills for hired vehicle and submit the same to ONGC along with two copies of the log book sheets of the hired vehicle. Payment shall be made by ONGC, after verification of above documents submitted by the appellant. This fact makes it clear that the monthly payment may vary from vehicle to vehicle and would depend upon the use of vehicle by ONGC personnel and the kilom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t vehicle by 2000 kilometers would be adjusted against over-running of second vehicle to the extent of 2600 kilometers and the appellant would be paid only for 600 kilometers @ ₹ 3.24 per kilometer. As such, the above clause fixing a minimum running pf the vehicle to the extent of 2400 kilometers, cannot be held against the appellant so as to conclude that the vehicle was given on rent basis and not on hire basis. 7. I find that the Division Bench of this Tribunal in case of M/s Vijay Travels (to which my learned brother was also a Member) vide Order No.A/649-650/WZB/AHD/2010, dt.3.6.10 has examined the issue and after following the Tribunal's decision in the case of CCE Vs. Miglani Taxi Service 2009 (15) Sales Tax 565 (Tri-Del.) has held that where the vehicle remains under the disposal and control of the contractor, the same shall not be treated as 'rent-a-cab' service. The other decisions in case of Shree Dharmbhakti Travels Vs. CCE Rajkot 2009 (13) STR 514 (Tri-Ahmd) and in case of Express Tours Travels 2005 (186) ELT 143 (Tri-Mumbai) are single member decisions and have not perused the terms of the contract and in fact in the case of Express Tours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... available or not, the above fact would not make a difference inasmuch there was enough material for the appellant to entertain a bonafide belief that there was utter confusion in the field regarding levy of Service Tax on the above service. Subsequent decisions given by the Tribunal laying down that such services cannot be held to be 'rent-a-cab' service, only reflects upon the situation where two different views are possible. It is also seen that the appellant wrote a letter to ONGC on 30.01.03 indicating that the Department is pressuring them to pay Service Tax on the said services. If that be so, it has to be held that the Department was aware of the appellant's activities and have also made the appellant aware of their liability in the year 2002 itself. It is not understood when the Revenue itself was aware of such activity, and had directed them to pay Service Tax, why no show cause notice was issued within the period of limitation and the Revenue had to wait till 2004 for search to take place. Circumstances, under which the extended period of limitation can be invoked, are suppression/mis-statement with intent to evade payment of duty. Such allegations are require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation as observed by Member (Judicial) or the extended period is required to be held as available to the Revenue, as observed by learned Member (Technical). iv) Whether the penalty is required to be set aside or the matter is to be remanded for segregation of the demand and re-determination of the amount of tax payable on 'rent-a-cab' service and for fixing of consequent penalty. (Announced on Court a 9.11.2010) (B S V Murthy) Member (T) (Archana Wadhwa) Member (J) Per: M V Ravindran: This difference of opinion has been listed before me as per the directions of the Hon'ble President for resolving the following difference of opinion :- (i) Whether on perusal and examination of various clauses of the contract, it has to be held that the appellant was providing 'Rent-a-Cab' services as held by learned Member (Technical) or the same amounted to hiring of the vehicles and not covered by the definition of 'Rent-a-Cab' service as held by Member (Judicial). (ii) Whether in view of the above finding, the Service Tax is required to be confirmed against the appellant and matter to be remanded only for quantification as hel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicle on duty, the appellant is required to take it back with substitute vehicle. It is also his submission that the contract is for minimum fixed charges per vehicle for particular run of 2400 Kms. per month and any kilometre traversed beyond 2400 Kms., would be chargeable additional. It is his submission that the perusal of the terms would clearly show that the appellant was required to give the vehicles to ONGC, which is as good as the rental agreement. It is his submission that, as recorded correctly by the learned Member (Technical) that when the vehicle is hired invariably for a specific purpose or distances and for going one place to another place it would fall under category of hiring and he would submit that in the case in hand, it is not so. He would distinguish the facts of case of Vijay Travels on the ground that the contract was for a limited period in that case while in this case, the contract is for a year and is for a vehicle per month. He would rely upon the judgment of Tribunal in the case of Dharmabhakti Travels and Express Tours and Travels as cited by the Member (Technical) in his order. He would submit that the judgment of the Hon'ble High Court of P H in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Member) was considering an identical issue and has held that in this kind of situation, the services rendered by the assessee cannot fall under the category of Rent-a-Cab services, as per the definition enshrined at Section 65 (91) of the Finance Act, 1994. I also find that the decision relied upon by the learned special counsel for the Revenue in the case of P. Sukumar, Bharat Travel and Express Tours and Travels were rendered by a Single Member Bench while the judgment of Sai Krishna Travels is rendered by a Division Bench. I also find that the judgment of Kuldip Singh Gill was not on an issue which is before me in , difference of opinion hence the said judgment may not carry the case of the Revenue any further. 6. As regards the question of limitation, I find that the issue involved was really in dispute and various Benches have been holding that the activities being conducted by the appellant herein would not fall under the category of Rent-a-Cab Services and hence the bonafide impression carried by the appellant could not be faulted with. 7. Accordingly, in my considered view, the order recorded by the Hon'ble Member (Judicial) is correct and I concur with her ..... X X X X Extracts X X X X X X X X Extracts X X X X
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