At, Customs Excise Service Tax Appellate Tribunal South Zonal Bench At Bangalore
By, THE HONORABLE JUSTICE: S.S. GARG
For Petitioner: H.Y. Raju, Advocate And For Respondents: Pakshi Rajan
1. The present appeal is directed against the impugned order dated 27-3-2008 passed by the Commissioner (Appeals) whereby the Commissioner (Appeals) has confirmed the order-in-original with respect to rent-a-cab service along with interest and penalty. Briefly the facts of the case are that the appellant is registered with the Service Tax department under the category of travel agent. During the course of audit it was observed by the audit party that in addition to air travel agency service, the appellants were providing services namely procurement of visa, passport, services towards medical insurance, rent-a-cab operator services and are receiving commission. The audit party also observed that the appellant received services in respect of car rentals and with regard to the said services the appellant were receiving certain consideration or commission as the case may be. Based on the audit objection, a show cause notice dated 28-6-2006 was issued alleging contravention of provisions of Sections 66, 67 and 68 of the Finance Act. After following the due process of law, the Dy. Commissioner vide order-in-original dated 31-7-2007 held that the audit party has rightly observed that the appellant's services in respect of procurement of passport and visa were classifiable under 'business auxiliary services' and confirmed the demand of Rs. 70,240/-. Further the Dy. Commissioner held that the services of the appellant in respect of mediclaim insurance is classifiable under business auxiliary services and confirmed the demand of Rs. 4,515/-. Dy. Commissioner also confirmed the demand of Rs. 23,416/- under the category of rent-a-cab services and also imposed interest and penalty under Sections 77 and 78. Aggrieved by the said order, appellant filed appeal before the Commissioner (Appeals) and the Commissioner (Appeals) vide the impugned order held that the amount collected as passport/visa charges for assistance rendered to the passenger are not taxable and as regards rent-a-cab service, the Commissioner held that the Service Tax is applicable on 40% of the gross amount charged from 9-7-2004 and with regard to business auxiliary services, the learned Commissioner invoked the extended period and upheld the imposition of penalty under Sections 77 and 78 but dropped the penalty under Section 76. Aggrieved by the said order, the appellant filed the present appeal.
2. Heard both the parties and perused the records. Learned counsel for the appellant submitted that the impugned order is not sustainable as the said order has been passed by misconstruing the definition of rent-a-cab service operator. He further submitted that the appellant is not a rent-a-cab operator. He is only arranging vehicles for their clients as outside agencies which cannot be termed as taxable service under rent-a-cab service operator. For a rent-a-cab operator service, the person must rent out cabs as his principal or primary business and not as incidental or secondary activity. In support of his submission, he relied upon the decision in the case of CIT v. Natwarlal Tribhovandas : 1973 (87) ITR 703 (Guj.). On the other hand, the learned AR reiterated the findings of the impugned order. After considering the submissions of both the parties and perusal of the records, I find that in the present case, the appellant is not primarily engaged in the business of rent-a-cab operator. He is only arranging vehicles for their clients from outside agencies for which he is only getting a commission and that amount of commission has been shown in his ledger which is produced on record. Further, I find that the learned Comm
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issioner (Appeals) has misconstrued the definition of rent-a-cab operator service as provided in Section 65(76) of the Act because the appellant is not engaged in the business of "rent-a-cab service". In view of this, I am of the view that the impugned order is not sustainable in law and therefore I set aside the impugned order and allow the appeal of the appellant with consequential relief.