If service tax is not separately charged, amount charged should be taken as inclusive of service tax

CESTAT, NEW DELHI BENCH

Speedway Carriers (P.) Ltd.

V/s.

Commissioner of Central Excise

Stay Order No. ST/S/525 of 2012-Cus.

Application No. ST/STAY/3482 of 2010

Appeal No. ST/1626 of 2010

April 11, 2012

ORDER

Mathew John, Technical Member

The appellants were engaged in the business of renting out low-floor buses to Rajasthan State Road Transport Corporation (RSTRC) on contract basis. RSTRC was using the buses as stage carriers for transportation of persons. The appellants did not pay service tax on the consideration received from RSTRC during the period 01-06-2007 to 31-12-2007.

2. Revenue was of the view that the appellants should have paid tax on the consideration received from RSRTC under the head for rent-a-cab scheme operator as as covered by defininton in entry at section 65 (20) of Finance Act, 1994 and made taxable under entry 65(105)(o) of Finance Act, 1994. A show cause notice issued on such basis demanding tax not paid during the period 01-06-2007 to 31-12-2007 along with interest and penalties has been adjudicated confirming an amount of Rs. 28,04,696/- along with interest and penalties and, imposing penalty under sections 76 and 78 of the Finance Act, 1994. In an appeal filed with Commissioner (Appeal), the appellants did not get any relief. Aggrieved by the order of the Commissioner (Appeal), the appellants have filed this appeal.

3. The Counsel for appellant submits that the appellants were not conducting any activity in relation to transportation of persons and such activity was carried on RSTRC. They were just renting out their assets in the form of low floor buses and this cannot be classified as Rent-a-Cab services. According to him they were bailing out their assets and there cannot be service involved in bailing out assets like buses.

4. Further his argument is that if at all any tax is payable on such activity it has become taxable only from 16-05-2008 under entry 65(105)(zzzzj) when this new entry was introduced and therefore there cannot be a liability on the appellant for the impugned period.

5. They also argue that even if they were liable to pay service tax they should have been granted abatement from taxable value as provided by notification 1/2006-ST, dated 01-03-2206 and hence they were liable to pay tax only on 40% of the gross amount charged by them. Further they submit that the value realized by them should be considered as cum-tax value and liability should be re-computed.

6. The Ld. A. R. for Revenue submits that the activity is squarely covered by entries at 65(20), 65(91) and 65(105)(o). Further he argues that the appellants have not claimed benefit of notification 1/2006-ST before lower authorities and so it cannot be said that they satisfied the conditions for availing the benefit under the said notification.

7. We have considered arguments on both sides. The definitions relevant are as under:

(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 :

(91) “rent-a-cab scheme operator” means any person engaged in the business of renting of cabs;

(105) “taxable service” means any service provided or to be provided, –

(o) to any person, by a rent-a-cab scheme operator in relation to the renting of a cab;

8. We are prima facie not able to see how the activity of the appellants is not covered by the definition. The argument of the appellants basically challenges the virus of the above entry as also the later entry under 65(105)(zzzzj) of the Finance Act and Tribunal is not appropriate forum for such challenge.

9. However we are not convinced about the argument of the Revenue as to why the abatement under Notification 1/2006-ST and abatement of cum-duty price cannot be extended to the appellant.

10. Considering the above aspects we are of the view that this is not a case for full waiver of pre-deposit of dues for admission of the appeal. We order the applicants to deposit an amount of Rs.5 lakhs within four weeks from the date of order for admission of the appeal. Subject to such pre-deposit there shall be waiver for pre-deposit of balance dues and stay on collection of such dues.

11. Compliance is to be reported on 21-05-2012.

NF