Entire Demand Beyond Normal Period is not Sustainable: CESTAT quashes Service Tax Demand on Hiring of Buses to MSRTC under ‘Rent a Cab Operator Service’ [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed service tax demand on hiring of the buses to Maharashtra State Road Transport Corporation (MSRTC) under ‘Rent a Cab operator Service’ and observed that the entire demand beyond normal period is not sustainable.

The appellant in the present matter is Green Logistics Corporation. The issue involved in the present case is that, whether the appellant is liable to pay Service Tax on the hiring of Buses to Maharashtra State Road Transport Corporation (MSRTC) under the head of ‘Rent a Cab operator Service’.

Mrugesh Pandya, Counsel who appeared on behalf of the appellant submits that the appellant was paying service tax under ‘rent a cab service’ and ‘Tour operator service’ regularly. They were under bonafide belief that, since hiring the vehicle is different from rent a cab service the same is not liable for service tax.

It was further contended that the issue involved in the present case was not free from doubt that whether the hiring of buses should fall under the taxable service of rent a cab service, only after various judgments it was held with the said service is liable to tax, in such a situation the appellant’s bonafide belief cannot be doubted.

Ajay Kumar Samota, Superintendent (AR) who appeared on behalf of the revenue reiterated the findings of the impugned order.

A Two-Member Bench comprising Ramesh Nair, Judicial Member and CL Mahar, Technical Member observed that “We find that there is no dispute that the issue involved interpretation of law regarding taxability of the service of hiring of buses. On this issue various cases have been decided and though finally it was held that the hiring of the buses also falls under ‘rent a cab service’ but considering the bonafide of the assessee the demand is set aside on the ground of time barred.”

“Even though the demand on merit was sustainable, but demand for the extended period was set aside. Considering this legal position is the present case since entire demand is beyond normal period the same is not sustainable. Consequently, the penalties are also not sustainable” the Tribunal noted.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates