The Ahmedabad bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that school busses does not fall under the definition of ‘cab’ under Section 65(20) of the Finance Act, 1994 and no service tax can be levied from Akshar Travels, the appellant.
Akshar Travels provided busses for rent on a monthly basis to be used as school buses to a school owned and managed by JK. Paper Ltd. The CCE demanded service tax for the income generated from the said service.
The counsel representing the appellant argued that they provided transportation to the school children from their homes to school and from school to home and the motor vehicle rented for imparting skills or knowledge is excluded from the definition of ‘cab’ under Section 65(20) of the Finance Act therefore no service tax is not applicable.
The Authorized Representative representing the revenue reiterated the findings of the impugned order.
After hearing from both sides, a two-member bench consisting of Ramesh Nair (Judicial member) and C.L. Mahar (Technical member) held that the service provided by Akshar Travels is clearly for school children, therefore service tax cannot be levied.
“We do not agree with this contention of the Revenue for the reason that the transportation was used for school children who are studying in the school run by J.K paper Ltd therefore, the bus service was exclusively used for transportation of children and not for the business purpose of J.K Paper Ltd” the Bench noted.
The bench noted that the lower authorities had wrongly denied the exclusion of service tax on the ground that the service recipient, J.K Paper Ltd which is a commercial organization and cannot be treated as an educational body.
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