TMI Blog2017 (1) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxable consideration - Held that: - the appellant did not produce any evidence to indicate that the gross amount charged by them is inclusive of service tax payable. In fact the liability to service tax has been contested by the appellant. Hence, in terms of the provisions, it cannot be concluded that the gross amount is inclusive of service tax when no reference has been made to the service tax in the basic documents for realising the consideration. The appellants are liable to service tax as confirmed by the Original Authority. However, the demand shall be restricted to the normal period and the penalty under Section 78 is not sustainable. The benefit of abatement in terms of N/N. 9/04-ST and 1/06-ST shall be allowed on production and verification of supporting documents for fulfilment of the conditions stipulated therein - appeal disposed off - decided partly in favor of appellant. - Service Tax Appeal No. 51091/2015(DB) - 56042/2016 - Dated:- 22-12-2016 - Shri S. K. Mohanty, Member (Judicial) And Shri B. Ravichandran, Member (Technical) Shri A.K. Batra, CA for the appellant Shri Govind Dixit, DR and Shri R.K. Mishra, DR for the respondent ORDER Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt from its client as lease rental and fleet management charges agreed at the time of entering into the agreement. There is no mention of charges on per km. basis. 4. Ld. Consultant submitted that the total VAT paid on the lease rental is more than the total service tax demand raised by the department. The appellants have followed the legal provisions with reference to deemed sale of vehicles and discharged VAT on such transaction. This is in terms of the provisions of VAT Act and Article 366 (29A) of the Constitution. It was submitted that the very same transaction cannot attract both service tax as also VAT. The ld. Consultant referred to the decisions of the Hon ble Supreme Court in the case of BSNL - 2006 (2) STR 166 (SC) and submitted that the five essential ingredients as held by the Hon ble Supreme Court have been fulfilled in the transactions of leasing undertaken by the appellant. 5. Ld. Consultant further submitted that no service tax can be levied on the amount received by the appellant towards fleet management services. It is submitted that the services provided by the appellant under the name fleet management services are not in relation to renting of cabs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of above three years, there is a deemed sale of the vehicles to the client. Such deemed sale, it is argued, can be taxed only by the State Authorities under the provisions of respective VAT Act. We note that the whole dispute rests on this submissions. In other words, the exact legal nature of the transaction between the appellant and their client has to be understood before arriving at a decision of service tax liability of the consideration received by the appellant. We note that the impugned order has examined the terms of agreement very elaborately. The main contention of the appellant that there is a deemed sale of vehicles, though the appellant remained owners of the said vehicles. We note that the statutory provisions for tax liability in terms of Section 65 (105)(o) of the Finance Act, 1994 stipulates that the taxable service means any service provided or to be provided to any person by a rent-a-cab scheme operator in relation to the renting of a cab. The various terms of these definitions have further been explained in Section 65 of the Act itself. As pointed out in the impugned order there is no reference to period of renting in the statutory provisions. The liability t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which are leased to them by the notices. As recorded by the Original Authority, the appellants do not fulfil the attributes as laid down by the Hon ble Supreme Court to determine and conclude the transaction to be a deemed sale . As such, we find that the appellants failed to sustain legally their plea regarding non-applicability of the provisions of Service Tax to the transactions of renting of motor cabs and on such consideration received. 12. In R.S. Travels 2008 (12) STR 27 (Tribunal-Delhi) , the Tribunal held that relying on the decision in the case of Express Tours and Travels Pvt. Ltd. 2006 (3) STR 664 that a Government s intention is to tax the provider of a service, which involves hire and renting of a cab formally for a long period. It was further held that the test for ascertaining whether an activity is covered by the entry rent-a-cab operator service is as to whether it involves giving a cab with or without driver to a client for a certain period of time for some consideration, which can be on per hour or per day or per month basis. 13. Ld. Consultant for the appellant referred to certain decided cases mainly involving interpretation of Sales Tax Act. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant to various clients. It is admitted that the appellants provide fleet management service to the clients, who are given cab on lease and not to any other person. The charges incurred by the appellant are for proper unkeep of the cabs and fleet management charges are recovered apart from the leasing charges. We are in agreement with the findings of the Original Authority that the fleet management service is not an independent activity but is integral to the renting a cab service and as such, considerations are to be taken together while determining the quantum of tax liability. 15. The appellants contested the demand covered by the first show cause notice dated 13.04.2011 as barred by limitation. The said show cause notice covered the period of 1.10.2005 to 30.09.2010. It was submitted that there was no suppression of any material fact from the department. On the transaction of leasing the motor vehicles to the clients, the appellants were discharging VAT treating the same as covered by the deemed sale in terms of VAT Law. The VAT paid during the relevant time is much higher than the service tax payable after taking into consideration the abatement available for the same. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an also be not sustained. 17. The appellant also pleaded for abatement in value for calculation of service tax as upheld by the Original Authority. Rent-a-cab service is eligible for abatement of 60% under Notification no.9/2004 dated 9.7.2004 and notification no.1/2006 dated 1.3.2006. The Original Authority denied the abatement on the ground that as per ST-3 returns, the appellant availed cenvat credit on inputs. Non-availment of credit of duty paid on inputs or capital goods is one of the conditions for such abatement. The appellants submitted that they have not availed any credit on inputs or capital goods in respect of the rent-a-cab service. It was further submitted that they have not availed benefit under notification no.12/03-ST dated 20.06.2003. We find that the findings by the lower authority is a general observation based on ST-3 returns without verifying the facts of availment of credit or benefit of notification no.12/03-ST based on the records. We find that the appellant will be eligible for the abatement in terms of the above mentioned notification on their submitting records to the effect that no cenvat credit has been availed on any of the inputs or capital goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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