Custom, Excise & Service Tax Tribunal
S. No. Service Tax Appeal No. Arising Out ... vs Commissioner Of Central Excise And ... on 7 October, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeals (s) Involved : S. No. Service Tax Appeal No. Arising out of Order No. & date Appellants 1. 111/2010 OIA No. 419/2009 dt. 15.10.2009 M/s Karnataka State Road Transport Corporation (KSRTC), Urban Division, Mysore 2. 208/2010 -do- KSRTC, Rural Div., Mysore 3. 1360/2011 OIA No. 18/2011 dt. 15.02.2011 KSRTC, Mandya Div., Mandya 4. 1366/2011 -do- KSRTC, Mandya Div., Mandya 5. 1367/2011 -do- KSRTC, Rural Div., Mysore 6. 1368/2011 -do- KSRTC, Rural Div., Mysore 7. 1369/2011 -do- KSRTC, Urban Div., Mysore 8. 1370/2011 -do- KSRTC, Urban Div., Mysore 9. 439/2012 OIA- No. 33/2012 dt. 24.01.2012 KSRTC, Chikmagalur Div., Chikamagalur 10. 440/2012 -do- -do- 11. 2773/2012 OIA No. 339/2012 dt. 01.08.2012 KSRTC, Mandya Div., Mandya 12. 3314/2012 OIA No. 530/2012 dated 11.10.2012 KSRTC, Rural Div., Mysore-575003 13. 3438/2012 OIA No. 480/2012 dt. 26.09.2012 KSRTC, Hassan Div., Hassan-573201. 14. 3498/2012 OIA No. 530/2012 dt. 11.10.2012 KSRTC, City Transport Div., Mysore. 15. 3556/2012 OIA No. 616/2012 dt. 06.11.2012 KSRTC, Hassan Div., Hassan-573201. 16. 25080/2013 OIA No. 615/2012 dt. 06-11-2012 KSRTC, Mandya Div., Mandya 17. 28552/2013 OIA No. MYS-EXCUS-000-DIVV-APP-HAB-024-13-14 dt. 23.09.2013 KSRTC, Rural Div., Mysore-570015. 18. 26182/2013 OIA No. 56/2013 dt. 13.03.2013. KSRTC, Mangalore Divi., Mangalore. 19. 26183/2013 OIA No. 45/2013 dt. 22.2.2013 KSRTC, Rural Div., Mysore-570015. 20. 26184/2013 OIA No. 46/2013 dt. 22.2.2013 KSRTC, Chikmagalur Div., Chikamagalur. 21. 28309/2013 OIA No. MLR-EXCUS-000-DIVUDP-APP-024-13-14 dt. 30.08.2013 M/s North West Karnataka Road Transport Corporation (NWKRTC), Siral Div., Siral-681402. 22. 3050/2011 OIA No. 109/2011 dt. 23.8.2011 NWKRTC, Chikkodi Div., Chikkodi. 23. 3051/2011 -do- NWKRTC, Chikkodi Div., Chikkodi. 24. 1669/2012 OIO No. 04/2012 dt. 15.3.2012 NWKRTC, Chikkodi Div., Chikkodi. M/s Karnataka State Road Transport Corporation M/s North West Karnataka Road Transport Corporation Appellant(s) Versus Commissioner of Central Excise and Service Tax, Mysore/Mangalore/ Belgaum. Respondent (s)
Appearance:
Mr. Pradyumna G.H., Advocate for appellants, M/s KSRTC Mr. Rajesh Kumar T.R., Advocate for appellants, M/s NWKRTC For the Appellant (s) Mr. Ajay Saxena, Commissioner (A.R.) and Mr. N. Jagdish, Supdt. (A.R.) For the Respondent(s) Date of Hearing: 14/06/2016 Date of Decision: 07/10/2016 CORAM :
HON'BLE SHRI S. S. GARG, JUDICIAL MEMBER HONBLE SHRI ASHOK K. ARYA, TECHNICAL MEMEBR Final Order Nos. 20935 to 20958/2016 PER ASHOK K. ARYA
1. At the outset, the learned Advocate, Shri Pradyumna G.H. appearing for the appellants, M/s Karnataka State Road Transport Corporation (KSRTC) produces a list of appeals and submits that in todays Cause List, there are only 14 cases of the appellant, KSRTC are listed, whereas six (06) more appeals (Nos. ST/1360/2011, ST/1366 to1370/2011) of the same appellant involving identical issue are pending before this Bench for the decision. Accordingly, the said appeals have also been called for consideration and decision.
1.1. These are total 24 (Twenty four) appeals, where the appellants are M/s Karnataka State Road Transport Corporation (KSRTC) and M/s North West Karnataka Road Transport Corporation (NWKRTC). The details of these appeals are given in Tables 1 & 2 below :
Table 1 : The details of the appeals of M/s KSRTC S. No. Appeal Numbers Period involved Service Tax (in Rs.) Penalties (in Rs.)
1. ST/111/2010 01.6.2007 to 31.3.2008 19,94,953 u/s 76 and Rs. 1,000/- u/s 77
2. ST/208/2010 01.6.2007 to 31.3.2008 4,61,641/- u/s 76 and Rs. 1,000/- u/s 77
3. ST/1360/2011 01.4.2009 to 31.10.2009 2,64,537/- u/s 76 and Rs. 1,000/- u/s 77
4. ST/1366/2011 01.6.2007 to 31.3.2009 17,55,289/- u/s 76 and Rs. 5,000/- u/s 77 and Rs.17,55,289/- u/s 78
5. ST/1367/2011 01.10.2008 to 31.10.2009 11,25,804/- u/s 76 and Rs. 4,000/- u/s 77
6. ST/1368/2011 01.4.2008 to 30.09.2008 1,58,690/- u/s 76 and Rs. 1000/- u/s 77
7. ST/1369/2011 01.4.2008 to 30.09.2008 4,87,575/- u/s 76 and Rs. 3000/- u/s 77
8. ST/1370/2011 01.10.2008 to 31.12.2009 9,85,238/- u/s 76 and Rs. 3,000/- u/s 77
9. ST/440/2012 10/2009 to 03/2010 3,94,842/- u/s 76 and u/s 77 10 ST/439/2012 4/2009 to 09/2009 2,05,662/- u/s 76 and u/s 77
11. ST/2773/2012 01.11.2009 to 31.3.210 3,77, 697/-- u/s 76 and Rs. 2,000/- u/s 77
12. ST/25080/2013 01.4.2010 to 31.11.2010 4,71,753/- u/s 76 and Rs. 2,000/- u/s 77
13. ST/28552/2013 10/2010 to 09/2011 12,68,236/- u/s 76 and Rs. 20,000/- u/s 77
14. ST/26182/2013 06/2007 to 03/2011 21,87,517/- u/s 76 and u/s 77
15. ST/26183/2013 01.11.2009 to 31.3.2010 7,30,621/- u/s 76 and Rs. 10,000/- u/s 77
16. ST/26184/2013 01.4.2010 to 31.12.2010 9,63,135/- u/s 76 and u/s 77
17. ST/3556/2012 06/2007 to 03/2009 20,08,019/- u/s 76 and u/s 77 and Rs. 20,08,019/- u/s 78
18. ST/3498/2012 01.01.2010 to 30.09.2010 22,346/- u/s 76, 77 & 78.
19. ST/3438/2012 04/2009 to 03/2010 11,98,490/- u/s 76 & 77
20. ST/3314/2012 01.4.2010 to 30.09.2010 3,06,818/- u/s 76 & 77 Table 2 : Details of the appeals of M/s NWKTC S. No. Appeal No. Period involved Service Tax (in Rs.) Penalty
1. ST/1669/2012 01.4.2009 to 31.3.2011 31,91,264/- u/s 76 & 77
2. ST/3050/2011 01.9.2007 to 31.3.2008 13,57,113/- u/s 76 & 77
3. ST/3051/2011 01.9.2007 to 31.3.2008 36,92,866/- u/s 76 & 77
4. ST/28309/2013 04/2010 to 03/2011 11,24,064/- Nil
2. The Revenue issued Service Tax demands (Show-cause notices SCNs) to these appellants inter alia on the ground that their subject operations are covered under the definition of rent-a-cab scheme operator under Section 65(91) of Finance Act, 1994, they being a person engaged in the business of renting of a cab.
2.1. The Revenue says that with effect from 1.6.2007, as per Section 65(105) of the Finance Act, 1994, the meaning of a cab is (i) a motor cab, or (ii) a maxicab, or (iii) any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward provided that the maxicab referred to in sub-clause (ii) or motor vehicle referred to in sub-clause (iii) which is rented for use by an educational body imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, shall not be included within the meaning of cab.
2.1.1. The Revenue says that with the amendment of the definition of cab with effect from 01.6.2007 any motor vehicle constructed or adapted to carry more than twelve passengers are also covered under the taxable service of Rent-a-Cab Scheme Operator Services and the corresponding 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. 2.1.2. Revenue further says that the appellants were renting out their buses which have the capacity to accommodate 50-60 passengers. They are renting out their buses on casual contract basis and collecting consideration on minimum charge basis or based on kilometer rate; it appears that such services are covered under the taxable service of Rent-a-cab scheme operators service with effect from 01.6.2007 by the inclusion of any motor vehicle constructed or adopted to carry more than twelve passengers to the definition of cab in terms of Sections 65(91), 65(20) and 65(105)(o) of the Finance Act, 1994 as amended and, therefore, the buses being rented out by them having the capacity of over 12 passengers are covered in the definition of a cab.
2.1.3. Based on the above, lower revenue authorities confirmed the demands of service tax along with interest and imposed penalties on the appellants.
3. The appellants have been represented by the learned advocate, Shri Pradyumna G.H. [for the appellant, M/s Karnataka State Road Transport Corporation (KSRTC)] and the learned Chartered Accountant, Shri Rajesh Kumar T.R. [for the appellant, M/s North West Karnataka Road Transport Corporation (NWKRTC)]. The Revenue has been represented by the learned A.R., Shri Ajay Saxena and the learned A.R., Shri N. Jagdish.
4. The appellants based on their written submissions inter alia submit as under :
(i) The main activity of the Appellants is transporting of passengers as stage carriage as per the mandate of Karnataka State Government. These buses are operated under stage carriage permits.
(ii) On occasional basis (less than 3%), the appellants are also providing buses under casual contract for the purpose of educational trips, marriages, election duties, pilgrimage etc., on kilometre basis.
(iii) The appellants cannot be considered as engaged in the business of providing buses on casual contract as the primary activity of the appellants is to provide bus facility/transport facility to the citizens by operating the buses as stage carriage for the convenience of citizens.
(iv) Among other grounds, the essential ground is that since they are not engaged in the business of renting of buses, they are not covered under the definition of rent-a-cab (assuming but not admitting that bus can also be considered as cab) wherein the person should be engaged in such business to be called as rent-a-cab operator.
(v) In the present cases, the appellants have collected the charges based on the actual number of kilometres run multiplied by the amount fixed per kilometre. However to fall under rent-a-cab there would be a fixed monthly rent and minimum number of kilometre would be fixed and crossing of such kilometre customer would be liable to pay extra. That is not in the present cases, accordingly it is very much clear that the appellants do not fall under rent-a-cab definition and, accordingly, the impugned orders require to be set aside.
(vi) The taxable service definition in this regard is defined under Section 65(105)(o) of the Finance Act, 1994 which reads as under :-
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.
(vii) Accordingly, the main ingredients of the above service as per the above Section are :
(a) the service provided to any person
(b) the service provided by a rent-a-cab scheme operator
(c) the service provided in relation to renting of cab.
(viii) The rent-a-cab scheme operator is defined under Section 65(91) of Finance Act, 1994. The definition reads as under :-
Rent-a-cab scheme operator means any person engaged in the business of renting of cabs. and, accordingly, to be considered as rent-a-cab scheme operator, the person should be normally engaged in such business and renting of cabs cannot be merely an incidental activity. Since in the instant cases, renting of buses (assuming it to be cabs), is not the main business, therefore, the appellants cannot be said to be engaged in the business of renting of cabs.
(ix) The issue is already settled by the decision of Bangalore Metropolitan Transport Corpn. (BMTC) Vs. CST, Bangalore 2015 (38) STR 976 (Tri), which is upheld by Honble Supreme Court as is reported in 2015 (38) STR J429.
(x) Further also in the case of CCE Vs. Sachin Malhotra 2014-TIOL-2039-HC-UKHAND-ST, even after considering the decisions relied upon by the revenue during arguments, it was held that unless there is control, which is passed to the hirer under the rent-a-cab scheme, there cannot be a taxable transaction under section 65(105)(o), read with Section 65(91) of the Service Tax Act..
(xi) The learned counsels submit that the issue is settled by the decision of this Bench in the case Bangalore Metropolitan Transport Corporation Vs. C.S.T., Bangalore [2015 (38) S.T.R. 976 (Tri.-Bang.)].
5. The learned A.Rs for the Revenue reiterate the findings of the lower authorities and in support they rely on the following case laws :
(i) Kuldeep Singh Gill [2010 (18) S.T.R. 708 (P&H.)]
(ii) Express Tours & Travels Pvt. Ltd. [2005 (186) E.L.T. 143 (Tri.-Mum.)]
(iii) Ajai Kumar Agnihotri [Final Order Nos. 56363 56364/2013 dated 02.5.2013]
(iv) Anil Engineering [2014 (34) STR 446 (Tri.-Del.)]
(v) Sri Pandyan Travels [2004 (163) ELT 409 (Mad.)]
(vi) Neeraj Construction [2009 (13) STR 145 (Tri.-Del.)]
(vii) Secy, Federn. Of Bus-operators Assn of T.N. [2001 (134) ELT 618 (Mad.)]
(viii) Viajy Travels [2014 (36) STR 513 (Guj.)]
(ix) Bharat Petroleum Corporation Ltd. [2009 (242) ELT 358 (Tri.-Mum.)]
6. We have carefully considered the facts of these cases, submissions of both the sides and the case laws cited.
7. Both the appellants namely KSRTC and NWKRTC are the Corporation owned by the State Government; their objective is to provide adequate, efficient and economic transport services to the general public in their respective operational areas. Their essential activities are plying their buses between the designated points on regular routes. In addition, occasionally they enter into casual contracts for the purpose of educational trips, election duties, pilgrimage etc. where they charge on kilometer basis. Their main objective and activities remain rendering services between one place(s) to other place(s) within their operation areas, which are fixed in advance and the beneficiaries are general passengers or common people who stay/live or are present in such areas.
8.1. We have to decide mainly the issue that wherever these appellants have provided their buses on individual contract basis - Whether such services could be classified as rent-a-cab service or not? In this regard we would be referring to the relevant provisions of the Finance Act, 1994. But before we refer to the said provisions of the Finance Act, 1994, it is to be noted that in the year 2012 on July 01, the concept of negative list was introduced in respect of levy of Service Tax and Section 66D of the Finance Act, 1994 came into force by its insertion in the said Act. An exemption Notification No. 25/2012-S.T. dated 20.6.2012 was issued and further, the Finance Act, 2012 inserted Section 66B in the Finance Act, 1994 which made clear that the service covered under the negative list (given in Section 66D) are not to be taxed. However, we are not considering the impact of these provisions as the period involved in the cases in hand is prior to 01.7.2012, the day when the concept of negative list was introduced.
8.2. We find that the said relevant provisions of the Finance Act, 1994 have been quoted in the Tribunals Final Order No. 20717/2014 dated 6.5.2014 in the case of Bangalore Metropolitan Transport Corporation (BMTC) Vs. C.S.T., Bangalore [2015 (38) S.T.R. 976 (Tri.-Bang.)]. The para 5 of the said order gives the relevant provisions of the Finance Act, 1994 as follows :
The definition of cab under Section 65(20) was amended w.e.f. 1-5-2007 by the Finance Act, 2007. As a result of this amendment, the scope of taxable Service Tax extended to include the renting of motor vehicles capable of carrying more than twelve passengers. The taxable service in relation to renting of the cabs has been defined under Section 65(105) (o) of the Finance Act, 1994 which reads as under :-
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 main ingredients of the above service as per the above Section are :
(a) the service provided to any person
(b) the service provided by a rent-a-cab scheme operator
(c) the service provided in relation to renting of cab.
The rent-a-cab scheme operator is defined under Section 65(91) of Finance Act, 1994. The definition reads as under :-
Rent-a-cab scheme operator means any person engaged in the business of renting of cabs.
Accordingly, any person who in the normal course does a business of renting of cabs will be taxable under this section. Section 65(20) of the Finance Act, 1994 defines a cab to mean -
(i) a motorcab, or (ii) a maxicab, or (iii) any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward :
Provided that the maxicab referred to in sub-clause (ii) or motor vehicle referred to in sub-clause (iii) which is rented for use by an educational body imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, shall not be included within the meaning of cab; The maxicab has been defined under Section 65(70) and motorcab has been defined under Section 65(71) of the Finance Act, 1994. The motor vehicle has been defined under Section 65(73) of the said Act which reads as under :-
motor vehicle has the meaning assigned to it in clause (28) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988), which is :
motor vehicle or vehicle means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four wheels fitted with engine capacity of not exceeding 25 cubic centimetres 8.2.1. From above provisions, it is clear that rent-a-cab scheme operator has to be a person who is engaged in the business of renting of cab. From the facts on record, it is clear that essential business of the appellants is plying the buses from one place to the other place(s), which are fixed in advance on regular basis. These appellants only on occasional basis [which one of the appellants say is only three per cent (3%) of their total operation] rent out their buses on specific demands from specific customers. We find that subject activities of these two appellants are in the category of the activities of Bangalore Metropolitan Transport Corporation (BMTC), whose appeal on the same subject matter was decided by this Tribunal in the decision of Bangalore Metropolitan Transport Corporation (BMTC) cited supra. The reasons given by the Tribunal in the said order in paragraphs 6 & 7 are applicable to the facts of the present cases. We reproduce paras 6 & 7 of the said decision of the Tribunal below :
6. We find that rent-a-cab scheme operator according to the provisions of Finance Act means any person engaged in the business of renting of cabs. The first question to be determined therefore is whether BMTC can be considered as engaged in the business of renting of cabs. It has to be borne in mind that while defining taxable service, there has been a conscious effort in indicating the directed service providers for the purpose of levy of Service Tax. In many of the definitions, we find the definition provides that services provided by any person to any person. In such a case, any person who has provided the service would become liable if the service itself comes within the definition of taxable service. In some cases, the word service provided by a commercial concern to any person is used. In such cases, the provider of service has to be a commercial entity and therefore a charitable trust may not be liable. In this case, the words used are services provided by a rent-a-cab scheme operator. Therefore firstly we have to decide whether BMTC can be considered as a rent-a-cab operator which according to the Finance Act means any person engaged in the business of renting of cabs. Apparently BMTC cannot be considered to be a person engaged in renting of cab service at all. The business undertaken by BMTC is to provide bus facility/transport facility to the citizens of Bangalore city and the main activity is running the buses in the city for the convenience of citizens and not a rent-a-cab scheme operation. We find that the definition itself excludes BMTC from the category of service providers.
7. Coming to the agreement also, we find that the appellant did not collect a monthly rent as observed by the Commissioner in his order. The charges are made on the number of kilometers actually run multiplied by the amount fixed per kilometer. In rent-a-cab scheme a monthly rent is fixed and minimum number of kilometer may also be fixed crossing which the customer may have to pay extra. If the number of kilometers falls below the number and even if it is substantially low, yet the customers would be liable to pay the entire rent. That is not the case here. Moreover as submitted by the learned counsel even in such cases where buses are given on kilometer basis, passengers have to be picked up from various points and dropped at the destination as in the case of stage carriage. Further, we also find that the show cause notice was issued in September, 2011 and the demand relates to the period substantial portion of which is time-barred. The discussion above would show that the issue is highly debatable and arguable and therefore the invocation of extended period can definitely be not sustainable. For the same reasons, imposition of penalties under various sections of Finance Act also cannot be sustained. The decisions cited by the learned AR have not been discussed since none of them relates to BMTC like party. 8.3. After examining all the facts on record we are convinced that the activities/operations of the appellants, which are under consideration are covered by the above decision of the Tribunal viz. Bangalore Metropolitan Transport Corporation (BMTC) vs. CST, Bangalore (supra), which has been affirmed by the Honble Supreme Court, when the Revenues appeal against the said decision was dismissed by the Honble Apex Court in the case of Commissioner vs. Bangalore Metropolitan Transport Corporation as reported in 2015 (38) S.T.R. J429 (S.C.). Therefore, following the decision of the Tribunal in the case of BMTC (supra), we are of the considered view that all these appeals deserve to be allowed.
8.3.1. The case laws cited by the Revenue are not applicable to the present facts, therefore, they do not support the stand of the Revenue.
9. Based on our above discussions and following the ratio of the decision cited above, all these appeals are allowed with consequential relief, if any.
(Pronounced in open court on .. ) (ASHOK K. ARYA) (S. S. GARG) TECHNICAL MEMBER JUDICIAL MEMBER /vc/