Customs, Excise and Gold Tribunal - Delhi
Kuldip Singh Gill vs Commissioner Of Central Excise on 12 May, 2005
Equivalent citations: 2005(186)ELT373(TRI-DEL), 2006[3]S.T.R.689
ORDER C.N.B. Nair, Member (T)
1. Indian Oil Corporation needed to transport for the employees of the Corporation. Therefore, it appointed a contractor for providing that service as and when required, ex-plant/terminal and to the point fixed by the Corporation. Shri Kuldip Singh Gill was one such operator, during the period 1-4-2000 to 28-2-2001. The Corporation paid Shri Kuldip Singh Gill about Rs. 18.7 lakhs for transport operation under the contract. The vehicle used was matador.
2. On 19-3-2001, the Deputy Commissioner, Central Excise, Jalandhar issued a Show-cause Notice contending that the service rendered by Shri Kuldip Singh Gill was "Rent-a-cab operator's services" which attracted Service Tax at the rate of 5%. Accordingly, a duty demand of over Rs. 93,000/- was raised in the Show-cause Notice, this service tax demand was confirmed in adjudication and upheld in appeal by the Commissioner (Appeals), Central Excise, Jalandhar. The present appeal is directed against that duty demand.
3. The contention of the appellant is that operating of matador services as undertaken by the appellant was not in the nature of "Rent-a-cab" service and no service tax was attracted. The point being made is that what was covered by the contract was the providing of transport services against payment on per kilometre basis and there was no renting of cab. It is being pointed out that the terms of the contract between the parties make this position clear. Reference is made to the following provision of the contract:
2. The contractor/s will operate the said buses for carrying the employees of the corporation as and when required by the corporation ex-plant/terminal and to the point fixed by the Corporation from time to time whether located within UTD. It is distinctly understood that the Corporation has not guaranteed an minimum turnover, whether daily, monthly or annually or during the duration of this agreement and the contractor/s will not be entitled to demand idle charges or minimum turnover charges or any other loss or damage of whatsoever nature against the Corporation for non-utilisation for the said buses wholly or in part.
3. The Corporation do not guarantee a minimum mileage work for each vehicle per month nor do they guarantee the minimum number of vehicles that will be utilised per month and no liability whatsoever shall be attached to the Corporation on account thereof.
4. The Corporation shall pay to the contractor/s for the operation of the said buses at the rates specified in the rate schedule attached hereto.
The rate fixed is as under :
RATE SCHEDULE Amount MATADOR MINIBUS
1. per school/marketing round trip a. For maximum distance of 12 kms.
b. For maximum distance of 24 kms.
2. Flat rate per kilometer
3. Minimum charges for vehicle per day Rs.
During the hearing of the case learned Counsel has referred to several definitions of the word 'Rent' in dictionaries and has submitted that 'rent' involved possession and use of property for a time and payment of compensation for such possession. According to the learned Counsel, there was no time dimension to the operation of the bus at all and the payment was for distance travelled. He has, therefore, submitted that this was a case of 'hire' of vehicle for operating transport service for fare in contradistinction to renting. As against this, the learned DR would contend, again based on dictionary meaning, that there is no difference between 'hire' and 'rent' and both mean the same.
4. The service in question was rendered in terms of the contract between the parties letter dated 30-3-1998 of I.O.C. to Shri Kuldip Singh Gill asks for "lowest rates in enclosed Annexure-A for providing school bus/marketing facility to Indian Oil Corporation Ltd., Suchipind for local round trips for different places...." It is clear from the contract that the Oil Corporation was not renting out any stipulated number of vehicles; but was making payment for operating trips to various places. The vehicle in question continued to be with the operator, including during the time of its operations for IOC. As and when the trips were required to be undertaken, the operator was asked to carry out the same and he was paid per trip depending upon distance, time etc. as per the rate sheet. The important thing to be noticed is that, the cabs were not leased out for any interval of time, for use by the Oil Corporation, according to its discretion. That service tax under the heading does not cover all manner of transport or vehicle hire services is clear from the wording of the heading itself. The levy has been defined as "any service provided... by a rent-a-cab scheme operator in relation to renting of a cab". In the present case, there was no renting of cabs. Instead, transport service was provided. In view of this, service tax demand on the appellant is not sustainable. The demand for interest and penalty have also to fail since they are dependent on the tax. The impugned order is set aside and the appeal is allowed with consequential relief.