The Chandigarh bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that demand of service tax is not leviable in absence of contract of hire and renting of a cab between the assesee and Punjab Road Transport Corporation (PRTC).
Shri Gurjant Singh Beant Singh, the appellants entered into different contracts with M/s Punjab Road Transport Corporation (PRTC),they have provided one bus each to M/s PRTC; the appellants were paid remuneration on per-kilometre basis; the appellants had to bear the expenses on account of diesel, repair and maintenance, salary of bus drivers etc; the remuneration paid was for kilometre-basis.
The Department was of the opinion that the appellants have provided “Rent-a-Cab Service’ and have not discharged the applicable service tax on the same.A show cause notices were issued to the above appellants and were confirmed by various OIOs which were upheld by different OIA.
Shri Jatinder Mohan, Consultant appearing for the appellants submitted that the authorities have not considered the fact that the turnover of each of the appellants was well within the exemption limit provided under Notification No. 06/2005 dated 01.03.2005 taking into account the fact that 60% of the gross receipt is exempted from payment of service tax in terms of Notification No.01/2006 dated 01.03.2006. Further submitted that the Department themselves have accepted this stand in respect of other persons who have similarly hired out their buses to M/s PRTC.
It was argued that the service provided by the appellants will not qualify to be “Rent- a-Cab Service” as proposed in the show-cause notices. Shri Raman Mittal, Authorized Representative for the Department reiterated the findings of the impugned order.
It was evident that the gross value of the taxable service rendered by each of the appellants is less than the threshold limit of Rs.10 Lakhs as prescribed under Notification No.06/2005-ST dated 01.03.2005 after giving allowance to the exemption for 60% of the gross receipt in terms of Notification No.01/2006-ST dated 01.03.2006.
The Tribunal viewed that in the case of Ashok Kumar Mishra (supra) held that for the purpose of calculating the threshold limit, 60% of the consideration exempt, vide Notification No.01/2006, should not be taken into account. If 60% of the consideration received by the appellants is excluded, they fall under the exempted category and as such, are not liable to pay any tax.
Ongoing through the agreements relied upon by the appellants, we find that the appellants have simply provided their buses to M/s PRTC on hire and have received remuneration on per-kilometre basis; there is no arrangement of renting.
A two member bench comprising Mr. S S Garg, Member (Judicial) and Mr. P. Anjani Kumar, Member (Technical) observed that in the case of R.S. Travels held that when there is a contract of hire and there is no renting of a cab, there is no question of the assessee being assessed in respect of services rendered in connection with rent-a-cab as there is no renting at all.
In light of the discussion, the Tribunal held that “the impugned orders are not sustainable and are liable to be set aside. We do so and allow all the seven appeals.”
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