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APSRTC-Kadapa And Others Versus CCCE&ST, Tirupati

2017 (11) TMI 773 - CESTAT HYDERABAD

Rent-a-Cab services - scope of the term 'renting' and 'hiring' - Andhra Pradesh State Road Transport Corporation (APSRTC), the appellants herein, are engaged in operation of buses in the State of Andhra Pradesh for travelling public. They were also providing buses for marriage functions, pilgrimage places etc. to private persons on commercial consideration. - Held that: - under the rent-a-cab scheme, the hirer is endowed with the freedom to take the vehicle, wherever he wishes, and he is onl .....

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ed to pay the metered charges, which is usually collected on the basis of the number of kilometers travelled. These are all matters, which are regulated by the Government. Unlike the said scenario, in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which, undoubtedly, implies that he must have possession and control over the vehicle. This is the fundamental distinction be .....

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e 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 having been aware of the distinct concept of renting a cab for which there is provision in the Central Legislation, namely, Section 75 of the Motor Vehicles Act and also a scheme stood framed as early as in 1989. We a .....

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of assessee being assessed in respect of services rendered in connection with rent-a-cab service. - There cannot be any tax liability on the appellants till 30.06.2012, in respect of hire charges received by them for providing buses for marriage functions/pilgrimages. Accordingly, the relevant portions in these impugned orders, as applicable, where the service tax liability has been upheld in respect of these activities of the appellants till 30.06.2012, will require to be set aside which .....

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permit or a special permit is obtained, the bus will then no longer have the character of a stage carriage but will instead acquire the colour of a contract carriage/special permit carriage. Viewed in this light, the buses of the appellants having become “contract carriage or a special permit carriage even if for temporary permit to provide them on hire for marriages/pilgrimage etc., they cannot be considered as a stage carriage for that short period and hence cannot then claim to be covered un .....

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and litigation, the penalties imposed in all these cases are set aside. - Appeal allowed in part. - ST/01886/2012, ST/25921/2013, ST/22292/2015, ST/30095-98/2016, ST/30120-23/2016, ST/30442-45/2016, ST/30483/2016, ST/30564/2016, ST/30123-30/2017 & ST/30354/2017 - A/31658-31683/2017 - Dated:- 24-10-2017 - Mr. M.V. Ravindran, Member (Judicial) And Mr. Madhu Mohan Damodhar, Member(Technical) Shri G. Natarajan, Advocate for the Appellant. Sh. B. Raja Ambedkar, Superintendent/Shri Amar Prakash, .....

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rtment viewed the said services as taxable under the category Rent-a-Cab services. Show cause notices were issued to all these appellants demanding differential service tax liabilities of various periods alongwith interest thereon and also proposing imposition of penalties under various provisions of law. Adjudicating authority confirmed the demands of service tax alongwith interest and penalties. In appeal, lower appellate authority vide order in appeals (OIA impugned orders), upheld orders of .....

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,089.00 5. ST/30096/2016 APSRTC-Narasapuram Jan.2012-Mar. 2013 86,989.00 6. ST/30097/2016 APSRTC-Tadepalligudem Jan. 2012-June 2012 39,172.00 7. ST/30098/2016 APSRTC-Eluru .do. 65,137.00 8. ST/30120/2016 APSRTC-Bhimavaram 01.01.2012-30.09.2012 56,590.00 9. ST/30121/2016 APSRTC-Jangareddy 01.01.2012-30.06.2012 72,894.00 10. ST/30122/2016 APSRTC-Narasapuram 01.06.2007-31.12.2011 274,178.00 11. ST/30123/2016 APSRTC-Tanuku 01.01.2012-30.03.2013 96,258.00 12. ST/30442/2016 APSRTC-Jangareddygudem 01.0 .....

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20. ST/30125/2017 APSRTC-Bhimavaram 01.04.2014-31.03.2015 248,412.00 21. ST/30126/2017 APSRTC-Jangareddy 01.04.2014-31.03.2015 152,518.00 22. ST/30127/2017 APSRTC-Eluru 14.10.2014-31.03.2015 257,922.00 23. ST/30128/2017 APSRTC-Narasapuram 01.10.2014-31.03.2015 66,143.00 24. ST/30129/2017 APSRTC-Tanuku 01.10.2014-30.09.2015 98,517.00 25. ST/30130/2017 APSRTC-Narasapuram 01.04.2015-30.09.2015 31,670.00 26. ST/30354/2017 APSRTC-Bhimavaram 01.04.2015-30.09.2015 51,538.00 3. On 08.09.2017, when the m .....

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e functions, pilgrimages etc. The demand of service tax in respect of the 25 Appeals, as per the list attached, is on the above activity, under the category of rent a cab operator service upto 30.06.2012 and as service as defined under section 65 B (44) of the Finance Act, 1994, post introduction of negative list based levy of service tax. (b) It has been held that the levy of service tax under rent a cab would be attracted, only when the possession and control of the vehicle is also given away .....

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e tax. (d) Section 66 D of the Act, containing the negative list covers the following, during the relevant period. Service of transportation of passengers, with or without accompanied belongings by- (i) A stage carriage; (ii) Railways in a class other than- (A) First class; or (B) An airconditioned coach; (iii) Metro, monorail or tramway; (iv) Inland waterways; (v) Public transport, other than predominantly for tourism purpose, in a vessel between places located in India and (vi) Metered cabs, r .....

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, charter or hire; or (iii) Ropeway, cable car or aerial tramway. (f) In the instant case, all the buses operated by APSRTC are stage carriage vehicles and there is no dispute on this fact. These stage carriage vehicles are used for purposes like marriage functions, pilgrimage, by obtaining a special permit under section 88 (8) of the Motor Vehicles Act, according to which such special permit can be granted to stage carriage vehicles as well as contract carriage vehicles. From the negative list .....

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ge carriage vehicles are used for transportation of passengers, even for purposes of tourism, conducted tour, charter or hire, there cannot be a demand of service tax. 4. The definition of rent a cab operator was considered by Hon ble High Court of Uttarakhand in the case of Commissioner of Customs & Central Excise Vs. Sachin Malhotra [2015(37)S.T.R 684 (Uttarakhand)] and the difference between renting and hiring was analysed. It was held for the period after 01.07.2012. 5. On the other hand .....

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l Engineering Vs. Commissioner of CE, Jaipur (2014(34)STR 44 (Tri.-Del); (d) M/s Carzonrent (India) Pvt. Ltd. Vs. Commissioner of Service Tax, Delhi-I (2017(50)STR 172 (Tri.-Del.); (e) M/s Lawrence Travels Vs. CCE, Nashik (2013(32)STR 715 (Tri.-Mumbai). (f) M/s Neeraj Constructions Vs. CCE, Jaipur (2009(13)STR 145 (Tri.-Del.). 6. Heard both sides and have gone through the facts of the case. Rent-a-cab service was brought into Service Tax net w.e.f. 16.09.1997. Section 65 (41) (r) defining the se .....

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s: As substituted by the Finance Act, 2003: Section 65(105) (o) Taxable service means any service provided to any person by a rent-a-cab scheme operator in relation to the renting of a cab; Section 65(91) rent-a-cab scheme operator means any person engaged in the business of renting of cabs; Section 65(20) cab means a motorcab or maxicab; Section 65(70) maxicab has the meaning assigned to it in clause (22) of section 2 of the Motor Vehicles Act, 1988 (59 or 1988); Section 65(71) motorcab has the .....

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field, other than a commercial training or coaching centre, shall not be included within the meaning of cab . 7. Thus, after amendment of 2007, the term cab would thenceforth cover buses also. It is not disputed that the appellants have been providing buses for marriage functions, pilgrimages to private persons/ marriage parties and collecting special hire charges. The issues that come up for appellate decision is for the impugned periods- (a) Whether the impugned periods upto 31.07.2012 (after .....

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to levy service tax from that date. The term service was defined in Section 65 B (44) of the Finance Act, 1994. The leviability of service tax under rent-a-cab service was exempted by Hon ble High Court of Uttarakhand in the landmark decision of CCE Vs. Sachin Malhotra (supra). The Hon ble High Court in their judgment unequivocally held that unless controlling of vehicle is made over to hirer and he is given possession for howsoever short period to deal with the vehicle, there would be no renti .....

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rel. But, this cannot detract from our enquiring into as to what is the transaction, which is actually brought to tax. We are constrained to pose this question and answer this question as what is sought to be taxed is the service in relation to the renting of cabs. So, the most important and crucial element, which we must bear in mind, is, whether there is a business of renting of cabs. Unless there is renting of cabs, there is no question of further enquiring as to the services, which may be re .....

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ect to the other terms of the contract; there would be no renting. A perusal of Section 75 of the Motor Vehicles Act, 1988 would also fortify us in the view that we have taken. Section 75 reads as follows : Scheme for renting of motor cabs. - (1) the Central Government may by notification in the official Gazette, make a scheme for the purpose of regulating the business of renting of motor cabs or motor cycles to persons desiring to drive either by themselves or through drivers, motor cabs or mot .....

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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 motorcabs 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. In terms of Section 75, a scheme has been framed by the Government, which is called Rent-A-Cab Scheme, 1989. It contemp .....

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ep the holder of the licence informed of his movements from time to time. (2) If an individual or company has hired the vehicles as a leader of the tourist party, it shall be the duty of such leader of the party to keep the holder of the licence informed of the movement of each vehicle, from time to time. (3) If a hirer so desires, he may engage a person possessing a valid driving licence to drive the vehicle so hired during the period of the hire agreement. A perusal of Clause 10 would re-enfor .....

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ession 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, which is usually collected on the basis of the number of kilometers travelled. These are all matters, which are regulated by the Government. Unlike the said scenario, in the case of a rent-a-cab scheme, as is clear from the very fundamental principle underlying the scheme, it is to give the hirer the fre .....

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nguishing feature between rent-a-cab and hiring is that, in the case of hiring , undoubtedly, the owner of the vehicle retains control and possession; he either drives the vehicle himself or employs somebody else to drive the vehicle; and the customer merely makes use of the vehicle by travelling 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 .....

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ction 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 having been aware of the distinct concept of renting a .....

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t judgment in the case of Commissioner of Customs & Cx Meerut Vs. R.S. Travels, where the Hon ble High Court reiterated that when there is only a contract of hire and there is no renting of cab, there is no question of assessee being assessed in respect of services rendered in connection with rent-a-cab service. The above judgments of Hon ble High Court have been followed by the Tribunal in the following cases: (a) CCE Vs P.B. Bobde [2015(40) S.T.R 953 (Tri.-Mumbai) (b) Rahul Travels Vs. CCE .....

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the appellants till 30.06.2012, will require to be set aside which we hereby do. So ordered. 11. Coming to the period from 01.07.2012 all services unless specifically mentioned in the negative list or otherwise, specifically exempted are liable to discharge service tax. 12. Ld. Advocate for the appellants was at pains to convey that as per Section 66 (D) (o), containing the negative list, also covers service of transportation of passengers , with or without accompanied belongings by, inter-alia .....

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ct, 1988, to understand the issue better. Section 72 of Motor Vehicles Act, 1988 covers the grant of stage carriage permits. Sections 73 & 74 govern the procedure for obtaining a contract carriage permit, section 88 (8) provisions for grant of special permit to any public service vehicle including a stage carriage vehicle for carrying passenger or passengers for hire or reward under a contract, express or implied, for the use of the vehicle as a whole, without stopping to pick up or set down .....

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