Case Law Details
Akshar Travels Vs C.C.E. & S.T.-Daman (CESTAT Ahmedabad)
In the case of Akshar Travels v. C.C.E. & S.T.-Daman [Service Tax Appeal No. 263 of 2012-DB, dated August 17, 2023], the CESTAT Ahmedabad ruled that the usage of motor vehicles for transporting school children significantly differs from the concept of rent-a-cab service. Therefore, no service tax is applicable to transportation services for children commuting to and from school.
Facts:
Akshar Travels (“the Appellant”) was engaged in the business of transportation of passenger, more specifically providing buses for transporting school children. The Appellant was providing transportation services to the school which is owned and managed by M/s. J.K Paper Limited (“the service recipient”) for which the Appellant was charging rent on a monthly basis from the service recipient.
The Revenue Department (“the Respondent”) contended that since, the service recipient is a commercial organization and the Appellant was providing rent-a-cab service accordingly the amount received from the service recipient was liable for service tax under the category of rent- a-cab service.
The Adjudicating Authority vide an order (“the Impugned Order”) confirmed the demand under the category of rent-a- cab service.
Aggrieved by the Impugned Order the Appellant filed an appeal before the CESTAT, Ahmedabad.
The Appellant submitted that transportation services were used by an educational body which was excluded from the definition of “cab” as provided under Section 65 (20) of the Finance Act, 1994 (“the Finance Act”). Therefore, service tax is not leviable.
The Appellant relied upon the Judgement of M/s. Maharashtra State Road Transport Corporation v. Commissioner of Central Excise [2016 (42) STR 32 (Tri. Mumbai)] wherein the CESTAT, Mumbai held that, tour operator service and Rent-a-Cab service are exempted if the journey is organized or arranged for an educational body.
Issue:
Whether motor vehicles rented for use by an educational body will be liable for service tax?
Held:
The CESTAT, Ahmedabad in Service Tax Appeal No. 263 of 2012-DB ruled as under:
- Observed that, the motor vehicle if rented by an educational body will not be included within the meaning of rent-a-cab.
- Relied upon the Judgement of M/s. Maharashtra State Road Transport Corporation v. Commissioner of Central Excise [2016 (42) STR 32 (Tri. Mumbai)] wherein the CESTAT, Mumbai held that, tour operator service and Rent-a-Cab service are exempted if the journey is organized or arranged for an educational body.
- Opined that, the Appellant has provided the bus service to the school for transportation children from and to school, this service is clearly for the school children who are taking education in the school.
- Held that, the motor vehicle has been used by an educational body for transportation of school children and therefore, the same is excluded from the definition of cab under Section 65(20) of the Finance Act.
- Set aside the Impugned Order.
Conclusion: CESTAT Ahmedabad’s ruling in Akshar Travels v. C.C.E. & S.T.-Daman establishes that motor vehicles used for transporting school children are not liable for service tax under the rent-a-cab service category. The decision affirms the educational body exclusion and clarifies the tax treatment for such transportation services.
Relevant Provision:
Section 65(20) of the Finance Act
“cab” means –
(i) A motorcab, or
(ii) A maxicab, or
(iii) Any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward”
Provided that the maxicab referred to in sub-clause (ii) or motor vehicle referred to in sub – clause (iii) which is rented for use by an educational body imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, shall not be included within the meaning of cab;”
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case are that the appellant has provided buses for transportation of the school children during the period 01.06.07 to March 2008 relevant to the present demand to the school owned and managed by M/S J.K Paper Limited. For the said transportation the appellant has collected the rent on monthly basis. The case of the department is that the appellant has provided rent-a-cab service accordingly the amount received from the service recipient is liable to service tax under rent- a-cab service.
2. Shri Sudhanshu Bissa, Learned Counsel appearing on behalf of the appellant had provided the bus service to the school children for
Transportation from their home to school and from school to home , the motor vehicles rented for use by an educational body imparting skills or knowledge is excluded from the definition of “cab”provided under Section 65 (20) of the Finance Act, 1994. Therefore, in the facts of the present case the service tax is not applicable. He placed reliance on the following judgments: –
- Maharashtra State Road Transport Corp n.–2016 (42) STR 32 (Tri. Mumbai)
- Sangam travels –2017 (50) STR 297 (Tri. All.)
- Skyline Motors India Pvt Ltd –2017 (6) GSTL 65 (Tri. All.)
3. Shri P. Ganesan, Learned Superintendent (AR) appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. As per the facts of the case the appellant had provided the bus service for transportation of school children from their homes to school and back. This service is clearly for the school children who are taking education in the school run by M/s. J K Paper Limited. Under rent -a -cab service the definition of cab is reproduced below:-
“(20) “cab”means –
(i)A motorcab, or
(ii)A maxicab, or
(iii)Any motor vehicle constructed or adapted to carry more than twelve passengers, excluding the driver, for hire or reward” Provided that the maxi cab referred to in sub-clause (ii) or motor vehicle referred to in sub –clause (iii) which is rented for use by an educational body imparting skill or knowledge or lessons on any subject or field, other than a commercial training or coaching centre, shall not be included within the meaning of cab;” From the above definition it can be seen that the motor vehicle which is rented for use by an educational body imparting skill or knowledge or lesson on any subject or field shall not be included within the meaning of cab. In this case it is admitted fact that the motor vehicle has been used by an educational body i.e., school for transportation of school children. Therefore, the same is excluded from the definition of rent-a -cab.
4.1 We find that the lower authorities have denied the exclusion of such service in definition on the ground that the service recipient is J.K paper Limited which is a commercial organization and cannot be treated as educational body. 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. Accordingly, we are of the considered view that the use of motor vehicle being for transportation of school children is clearly excluded from the definition of rent- a –cab service. Therefore, the same is not liable to service tax. This issue has been considered in various judgment
cited by the appellant which supports the appellant’s case; therefore, the demand is not sustainable.
5. Accordingly, the impugned order is modified. The appeal is allowed with consequential relief, if any, in accordance with law. Stay Application also stands disposed of.
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