Custom, Excise & Service Tax Tribunal
Bangalore Metropolitan Transport ... vs Commissioner Of Service Tax ... on 6 May, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order . 20717 / 2014 Application(s) Involved: ST/Stay/26396/2013 in ST/26084/2013-DB Appeal(s) Involved: ST/26084/2013-DB [Arising out of OIO No.07-2012 dated 31/01/2012 passed by Commissioner of Central Excise and Service Tax , SERVICE TAX - BANGALORE ] Bangalore Metropolitan Transport Corporation Chief Traffic Manager, Central Office, K.h. Road, Shanthinagar BANGALORE - 560027 KARNATAKA Appellant(s) Versus Commissioner of Service Tax BANGALORE-SERVICE TAX NULL 1ST TO 5TH FLOOR, TTMC BUILDING,above BMTC BUS STAND,DOMLUR BANGALORE, - 560071 KARNATAKA Respondent(s)
Appearance:
S. RAGHU ADV NO.543, 12TH CROSS, 8TH MAIN, J.P.NAGAR 2ND PHASE, BANGALORE 560 078 For the Appellant Dr. A.K. Nigam, Addl. Commissioner(AR) For the Respondent CORAM:
HON'BLE SHRI B.S.V.MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 06/05/2014 Date of Decision: 06/05/2014 Order Per : B.S.V.MURTHY M/s. Bangalore Metropolitan Transport Corporation (BMTC) are holders of service tax registration no.AAACB9672QST001 and are paying the service tax wherever they are required to be paid like the services pertaining to advertisement agency, renting of immovable property and manpower recruitment services. However, the main business of the appellant is transporting of passengers with the city of Bangalore and nearby mofussil areas. For this the buses are operated under stage carriage permits. This apart, the appellant is also providing buses to factories for transport of their employees and also schools and college for transport of students. Taking a view that such provision of buses to factories, industries etc. for transporting their employees and also for providing buses at the request of individuals for special functions etc. amounts to rendering of rent a cab service, proceedings were initiated which has culminated in demand for service tax of Rs.4,60,23,320/- for the period from 01/06/2007 to 31/03/2011 with interest and penalties under various sections have also been imposed.
2. The learned counsel on behalf of the appellants submitted that the appellant is not at all rendered any service under the heading rent a cab service. When enquiries were made by the Department in September 2008 itself, the appellants had replied that they were not liable to pay service tax and proceedings were initiated after nearly an year for demand service tax. Therefore, he submitted that the entire demand is time barred. He also submitted that the appellants cannot be considered as liable to pay service tax since just like BMTC buses which pick up passengers in various bus stops and run on scheduled tips from place to place within the city, in the case the buses are running from different points of the city from factory and employees were picked up en route from various points, the services provided are similar to the normal activity of BMTC and cannot be considered as rent a cab service. He drew our attention to the fact that no specific bus with registration number is allocated for any of the customers and the charges are made on the actual distance run in a month and the rate is charged per kilo meter. There is no fixed charge per month and customers are free to inform the appellant in advance whenever they do not need services. He submitted that these are factors which were shown clearly that what was rendered is not rent a cab service. He also submitted that the buses are considered as stage carriage buses and operations carried out for their customers also cannot be considered otherwise. He also submitted that as per the definition rent a cab scheme operator means a person engaged in the business of renting of cabs. He submitted that BMTC cannot be considered to have engaged in the business of renting of cabs.
3. Learned AR submits that the very same issue had come up before the Tribunal in the case of Jai Santoshi Maa Travellers and this Tribunal vide Final Order No.56363-56364/2013 dt. 02/05/2013 had held that the appellant therein was directed to pay service tax on rent a cab service. Further he also submitted that the provision of buses to factories and industries would amount to renting of buses to them and it cannot be considered as a stage carriage operation.
4. The matter was heard quite for some time and we find that the issue involved in this case falls within a narrow compass and without requiring any further details which is to be postponed in a final hearing stage. Accordingly we consider it appropriate that the matter should be decided finally at this stage itself. Learned AR did not express any objection and the counsel for the appellant also agreed to the same. Accordingly, the requirement of predeposit is waived and appeal itself is taken up for final decision.
5. The main issue that is to be decided is whether the service of providing buses on contract basis by the appellant to various factories and firms on monthly rental basis can be classified as rent a cab service or not. It would be appropriate to reproduce the relevant legal provisions before we proceed further.
The definition of cab under the Section 65(20) was amended w.e.f. 01/05/2007 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 maxi can has been defined under Section 65(70) and motor cab 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"
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 concerned is 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 is multiplied by the amount fixed per kilometer. A 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 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 what was taken 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 BMTC like party.
8. In view of the above, we find that on merits appellants have made out a strong case and we find that the impugned order cannot be sustained. Accordingly, the appeal filed by the appellants is allowed with consequential relief, if any, to the appellants.
(Operative portion of the order pronounced in open court) S.K. MOHANTY JUDICIAL MEMBER B.S.V.MURTHY TECHNICAL MEMBER Raja 5