CESTAT-Chennai : Where assessee provided cab to other travel agents for rendering services to foreign tourist, activity undertaken by assessee would not fall under category of ‘rent-a-cab scheme operator service’

CESTAT, Chennai Bench

Wheels Tourists Operator Vs. Commissioner of GST & Central Excise

Section 65(91)

Ms. Sulekha Beevi C.S., Judicial Member And Madhu Mohan Damodhar, Technical Member

Final Order Nos. 40579-40580/2018

Appeal Nos. ST/32 And 162/2008

March 6, 2018

ORDER

1. The issue in both the appeals being identical, they are heard together and are disposed by this common order.

2. Brief facts are that the appellants are engaged in the business of providing Tourist Transport Service. They render services mainly to travel agency service and corporate entities. Apart from this, they also render services to the individual clients directly. Based on intelligence that the appellant had not been discharging service tax on the actual value of taxable services received, officers of the SIV Cell of Service Tax Commissionerate visited the premises on 12.9.2005 and conducted inquires. Certain documents were recovered. Pursuant to such investigation, show cause notice was issued to the appellant proposing to demand service tax under the category of Rent-a-Cab Service along with interest and also for imposing penalties. After due process of law, the original authority confirmed the demand of Rs. 92,46,651/- for the period April 2001 to March 2006 and Rs. 22,65,398/- for the period April 2006 to March 2007 along with interest and imposed penalties under various provisions of Finance Act, 1994. Hence the appellants are now before the Tribunal.

3. The ld. counsel Shri S. Venkatachalam appearing for the appellant submitted that the appellants have not rendered the services of renting of motor vehicles as defined under section 65(91) of the Finance Act. To attract the definition under the said section, a person should be ordinarily engaged in the business of rent-a- cab service. To fall under the said definition, the control of cab/vehicle should be handed over to the person who hired the cab. In the appellant s case, the vehicle was always under the appellant s control and at no point of time the control has been handed over to other travel agents for their use. The vehicles/cabs were engaged by the other travels agents mostly for the journey of the foreign tourists and also to some extent for domestic clients. The said travel agents send the vehicles to places of visit arranged by them. The vehicles were engaged for the said trip as agreed on kilometer basis and the vehicle was always under the control of the appellant and driven by the appellant s driver and therefore the appellant have only provided transport services. The activity therefore does not fall under the category of rent-a-cab operator service. Accordingly, no service tax can be fixed on the appellant. He relied upon the following case laws:-

a. CCE v. Sachin Malhotra [2014] 51 taxmann.com 392/48 GST 738 (Uttarakhand)

b. C,C & CE v. R.S. Travels [2014] 51 taxmann.com 491/[2015] 49 GST 38 (Uttarakhand)

c. R.S. Travels v. CCE [2008] 15 STT 437 (New Delhi – CESTAT)

d. CCE v. P.B. Bobde [2016] 53 GST 206/[2015] 64 taxmann.com 126 (Mum. – CESTAT)

e. Sunil L. Parmar v. CST [2011] 14 taxmann.com 46/33 STT 215 (Ahd. – CESTAT)

4. The ld. counsel also argued that the period upto 2007 would be hit by limitation for the reason that an earlier Show Cause Notice No.104/2005 dated 17.10.2005 issued invoking extended period had been dropped by the department after adjudication. Therefore, the allegation of mis-statement or suppression of facts cannot sustain.

5. The ld. AR Shri K. Veerabhadra Reddy reiterated the findings in the impugned order. He submitted that the very same issue was decided by the Hon’ble High Court of Gujarat in the case of CST v. Vijay Travels [2014] 48 GST 540/51 taxmann.com 72 wherein the issue has been held in favour of the department. That the decision rendered by the Hon’ble High Court of Uttarkhand in the case of Sachin Malhotra (supra) has been rendered without taking note of the earlier decision of the Hon’ble High Court of Gujarat in the case of Vijay Travels (supra). He submitted that the said decision may be applied to the present case as the facts being the same.

6. Heard both sides.

7. The issue that arises for consideration is whether the activity of providing cab to other travel agents for rendering services to foreign tourist would fall under the definition of rent-a-cab service. The definition of rent- a-cab scheme operator as under section 65(91) is any person engaged in the business of renting of cabs. The Hon’ble High Court in the case of Sachin Malhotra (supra) has analyzed the meaning of Renting. It was held that renting is different from hiring.

8. In para 15.4, the Commissioner has noted that the appellant provided their vehicles to another tour operator and collected hire charges. It is thus concluded by the Commissioner that hiring of vehicles is nothing but renting of vehicles. The Annexures to the show cause notice also show that the appellant has collected hire charges from other travel agents. The facts reveal that the appellant was collecting hire charges. The issue whether hiring of vehicles would fall under definition of rent-a-cab service has been decided in the case of Sachin Malhotra (supra) and R.S. Travels (supra). The said decision has been followed by this Bench in Om Sakthi Travels vide Final Order No. 42127/2017 dated 18.9.2017. Further, the said decision is a later decision than the decision of Hon’ble Gujarat High Court in the case of Vijay Travels (supra). Therefore following the decision in the case of Sachin Malhotra (supra) and R.S. Travels (supra) as well as our own decision in Om Sakthi Travels (supra), we hold that the demand cannot sustain. The impugned orders are set aside and the appeals are allowed with consequential relief, if any.

[Citation : 2018-Taxcaselaw-27-CESTAT-Chennai-GST]