Custom, Excise & Service Tax Tribunal
Transport Solution Group vs Mumbai Iv on 26 February, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NO: ST/250/2005
[Arising out of Order-in-Appeal No: BR(11)11/STC/2005 dated 20/07/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.]
For approval and signature:
Honble Shri P.R. Chandrasekharan, Member (Technical)
Honble Shri Anil Choudhary, Member (Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes
Transport Solution Group
Appellant
Vs
Commissioner of Central Excise
Mumbai IV
Respondent
Appearance:
Shri Bharat Raichandani, Advocate for the appellant Ms. D.M Durando, Dy. Commissioner (AR) for the respondent CORAM:
Honble Shri P.R. Chandrasekharan, Member (Technical) Honble Shri Anil Choudhary, Member (Judicial) Date of hearing: 26/02/2013 Date of decision: 26/03/2013 ORDER NO: ____________________________ Per: P.R. Chandrasekharan:
The appeal is directed against Order-in-Appeal No: BR(11)11/STC /2005 dated 20/07/2005 passed by the Commissioner of Central Excise (Appeals), Mumbai Zone I.
2. The appellant, M/s. Transport Solution Group, were engaged in the business of transport solutions and undertook supply of cabs to M/s. Mahindra & Mahindra for the transportation of their staff. However, they did not register with the Central Excise department during the period 01/09/2001 to 31/05/2002 nor did they pay any service tax on the consideration received amounting to ` 3,55,48,949.92 during the said period. Accordingly, a show cause notice dated 13/10/2003 was issued to the appellant demanding service tax of ` 17,77,448/- under the provisions of Section 73 of the Finance Act, 1994 by classifying the service under the category of Rent-a-Cab service along with interest thereon. In addition, penalties were also proposed for the contravention of the Service Tax Act and Rules and for suppression/concealment of the correct value of the service under the provisions of Sections 76, 77 and 78 of the Finance Act, 1994. The notice was adjudicated and service tax demand was confirmed along with interest thereon. Further, a penalty of ` 17,77,448/- was imposed under Section 76, in addition to a penalty of ` 2,000/- under Section 77. The appellant preferred an appeal before the lower appellate authority who dismissed the appeal. Hence the appellant is before us.
3. The learned counsel for the appellant makes the following submissions. The appellant does not own any cabs. However, they had entered into an agreement dated 21/11/2001 with M/s. Mahindra & Mahindra Ltd. for carrying out pick-up and drops of the staff of Mahindra & Mahindra as per the requirement of the said client. The contract also specified the type of vehicles required to be supplied and also the number of vehicles to be supplied for the said work and it was the responsibility of the contractor to ensure that the services were rendered as per the requirements of the client and the drivers who are required to drive the vehicle possess the necessary skill and licence to undertake the work and are medically fit and the appellant should ensure that the drivers undertake the work as per the requirement of the client. The contract further stipulates that the equipments to be fitted on to the vehicles and the total number of passengers that can be transported for each type of vehicle.
3.1. It is the contention of the advocate that they did not own the vehicle; that they had hired the same from other vehicle owners and supplied the vehicles to M/s. Mahindra & Mahindra as per the contract. The activity undertaken by them cannot be considered as Rent-a-Cab Service inasmuch as they have not undertaken any renting. They were paid consideration based on the mileage used. In June, 2002 they had filed an application for registering themselves under Storage and Warehousing Services and Rent-a-Cab Services and the department sought clarifications from them with regard to the registration under Rent-a-Cab Services which was replied to by them in August, 2002. In September, 2002 the department granted registration and sought information regarding date of commencement of the service and also to pay service tax @ 5% with applicable interest and to file relevant returns. In March, 2003 they had replied to the department informing that they are not operating under rent-a-cab scheme and informed the department that the consideration received by them during the period 01/09/2001 to 31/05/2002 would be ` 3.55 crore and thereafter a show cause notice dated 13th October, 2003 was issued to them.
3.2. It is the appellants contention that they did not suppress any information from the department and therefore, extended period of time could not have been invoked by the department to confirm the demand. The learned counsel also relies on the decision of this Tribunal in the case of Kuldip Singh Gill vs. Commissioner of Central Excise, Jalandhar 2006 (3) STR 689; Ganesh Maniyani vs. Commissioner of Central Excise 2008 (9) STR 152; Deepak Transport Bus Service vs. Commissioner of Central Excise 2012 (27) STR 357; and Sri Sai Krishna Travels vs. Commissioner of Central Excise 2010 (18) STR 220 in support of the contention that they are not renting out cabs and, therefore, services rendered by them would not come under the category of Rent-a-Cab Service. He also relies on the decision of the honble apex Court in the case of Larsen & Toubro Ltd. vs. Commissioner of Central Excise 2007 (211) ELT 177 (SC) in support of the case that neither in the show cause notice nor in the adjudication order, there is any allegation of fraud or suppression and inasmuch as the same has not been specifically pleaded, extended period of time could not be invoked. In the light of these submissions it is contended that the order is not sustainable in law.
4. The learned Dy. Commissioner (AR) appearing for the Revenue, on the other hand, submits that from the terms of the contract entered into by the appellant with M/s. Mahindra & Mahindra Ltd., the same was for supply of cabs of different specifications along with drivers and, therefore, the activity would come squarely under the category of Rent-a-Cab Services. As regards the contention that the appellant has not suppressed any facts, the learned AR submits that information was provided to the department about the activities of the appellant and the consideration received for the same, only in March, 2003 and the show cause notice has been issued in October, 2003, i.e., within a period of one year from the date of knowledge, and, therefore, the demand is sustainable in law.
5. We have carefully considered the rival submissions made by both the sides. We have also perused the agreement between the appellant and his client M/s. Mahindra & Mahindra Ltd. As per the terms and conditions of the agreement, the appellant was required to supply different types of vehicles of stipulated specifications for undertaking the pick-up/drop of their clients employees; the number of vehicles to be supplied were also specified in the said agreement. The appellant was also required to supply drives with the requisite licence and skills for driving the vehicle. The contract also specified the payment at a flat rate on per kilometer basis for different types of vehicles. From the perusal of the agreement it is evident that the agreement was for the purpose of supply of vehicles of required specifications. The taxable service means any service provided to any person by a rent-a-cab scheme operator in relation to renting of a cab and the term rent a cab scheme operator means any person engaged in the business of renting cabs, and the cabs includes both motor cabs, and maxi cabs, as defined in the Motor Vehicles Act, 1988. There is no dispute of the fact that the vehicle supplied by the appellant satisfied this criterion. As per the Trade Notice No. 1/2000 dated 27/04/2000 issued by the Pune Commissionerate, any person who is engaged in the business of rent-a-cabs would be required to pay service tax irrespective of the number of vehicles engaged by him in providing the service. There is no stipulation either in the Act or in the Rules that the person renting the cabs should also own the vehicles. So long as the person rents a cab either owned by him or cabs procured from elsewhere, the liability to pay service tax would arise and, therefore, the activity undertaken by the appellant gets squarely covered under the definition of Rent-a-Cab Services. 5.1. The appellant had placed reliance on a number of decisions, such as Kuldip Singh Gill, R.S. Travels, Sri Sai Krishna Travels, etc. wherein it has been held that transport services undertaken for transport of persons would not come under the purview of Rent-a-Cab Services as the service undertaken is transportation of passengers. However, this decision of the Tribunal in the Kuldip Singh Gills case has been overruled by the honble Punjab and Haryana High Court in the same case reported in 2010 (18) STR 708 (P&H) wherein it was held that the transport services provided by the respondent in that case was a taxable service under the category of Rent-a-Cab Services. In view of the decision of the honble High Court of Punjab & Haryana the reliance placed by the appellant on the various case laws is no help to them. The other decisions relied upon by the appellant was based on Kuldip Singh Gillss case which was overruled by the Punjab & Haryana High Court. In the Deepak Transport Bus Service case, this Tribunal had take a prima facie view that supply of bus for transportation of passengers on stage carriage basis to a Municipal Corporation along with drivers would come within the taxable service category of Rent-a-Cab service relying on the decision of the honble High Court of Madras in Secretary, Federation of Bus-Operators Association of Tamil Nadu vs. Union of India 2006 (2) STR 411.l 5.2. In the light of these decisions, we are of the considered view that the activity undertaken by the appellant would fall squarely within the category of Rent-a-Cab Service and, therefore, the demand for service tax under rent-a-cab services is sustainable in law.
5.3. Coming to the issue of whether the demand is time-barred or not, from the records of the case, it is seen that even though the appellant applied for registration in June, 2002, there were number of correspondences exchanged between the department and the appellant, and the information relating to the consideration received by the appellant during the period 01/09/2011 to 31/05/2002 was furnished by the appellant to the department only in March, 2003, even though the department had sought for these details as early as in October, 2002. Inasmuch as the show cause notice has been issued on 13th October, 2003 i.e. within a period of one year from the date of knowledge, it cannot be alleged that the show cause notice is time barred, as has been held by the honble apex Court in the case of Nizam Sugar Factory Ltd. It is the date of knowledge of the activity by the department which is relevant for computing the time-limit and accordingly, we hold that the show cause notice has been issued within the time-limit specified and the demand is not time-barred. Since the appellant did not file any returns they are rightly liable to penalty under Section 77 and we uphold the same. As regards the penalty imposed under Section 76 the said penalty is attracted for failure to pay service tax by the due dates and there is no mens rea required to impose penalty under the said Section. Therefore, imposition of penalty under Section 76 is also sustainable in law, subject, of course, at the rates prescribed in the said section and also subject to ceiling of ` 17,77,448/- which was the amount in default.
6. In view of the above we do not find any merit in this appeal and accordingly, the same is dismissed.
(Pronounced in Court on 26/03/2013) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as 10